FCP- DVDSP sequence settings. frame size

Question of sequence settings. when making a DVD, will the sequence setting, Frame size make a difference?
We are just starting to edit a documentary, which uses alot of still photos and graphics. The rest of the video is shot on DV. I have tried laying still photos on the DV sequence, but it looks like still photos look really compressed and blurry. Not so good quality wise. If I set it to CCIR 601-NTSC, the photos look super good. We are NOT outputting any digi-beta uncompressed, but only to DVD.
I am editing sequence in NTSC DV, but thinking of just before getting outputting with compressor, I am thinking of changing to uncompressed sequence CCIR 601-NTSC, and then compress it to MPEG2. (doing this later so that i can do alot of edits RealTime and worry about picture quality later) of course the picture size does get smaller... I don't really know the effect of this on a teleframed television.
Will that make a difference? Seems that if I go through DVcompression AND MPEG2 compression, both, is more compression than MPEG2 compression itself. Is there a site that talks about it?
Thanks in advance.
Lost

I only have "a bit" of experience working with stills in a DV sequence. But one thought concerns how you are integrating the stills and the video. I assume you are going to pretty much intermix the stills and the video and audio (interviews or whatever) that may go with video and stills.
The DVD format, of course, supports stills as a slide show directly, but this will not accomplish the intermix very effectively.
As far as size-quality, you may want to import the stills are larger than DV image size and then pan across them, etc.
At the end of the day, to achieve a seamless edit job, you are probably going to need to have all the stills sitting on a regular DV timeline for export / encoding to MPEG2.
I honestly do not put much stock in the differences between viewer and canvas. I always use an external NTSC monitor to judge the final appearance. I started with a cheap TV and recently upgrade to a nice JVC production monitor. This is the real measure of the final video, in my experience.

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