Increasing Bitrate for Encode resulting in horrible results

I've been migrating from Final Cut Studio to all the various Adobe alternatives and having an issue with Encore right now. 
I've been successfully making DVDs and letting Encore automatically encode for me (As I often times end up making a BluRay as well of a project, this gives me the option of swapping out the footage and keeping the chapter markers intact).  So far it's been working great and calculates things to within 20mb of utilizing all available disc space.
I'm having problems with my most recent project, however.
Initially it was going to be the standard warning video intro and a 1:45 video. Had everything encoded and it looked great (and the show video was 3.9GB).  Then the client decided to add another 10 minute slideshow to things and everything...went downhill.  Original encode still worked and fit on the disc, but in a moment of stupidity I thought it would be good to re-encode so I had everything fresh. And for some odd reason the show's size shrank from 3.9GB to 3.2GB, leaving over 500mb of unused space. It looked OK but I thought it would be good to reclaim the underutilized bitrate. And every effort to do so has resulted in really horrible lacing issue/jagged piano strings and lines footage on the DVD.
Not sure why given that all I've done is increase the Target Bitrate of the standard Transcode setting (NTSC DV 23.97 High Qulality 2 pass 4mb) from 4 to 5 mbps and the Pixel Aspect Ratio from Standard 4:3 to Widescreen 16:9 (thus increasing the Estimated File Size from 3212 to 3900)
The source clip is 720X480 (1.2121) 29.97fps, progressive
I've kept Field Order at "Automatic" (so think I'll try changing it to None (Progressive) in case it wasn't really doing it automatically).
Is there anything else? It's a pretty static concert one camera shot
Thanks for any help
Jonathan

That's what I'm afraid of   I was hoping I was going to hear something like "the algorithn for bitrate doesn't like 5, try 4.8" or something like that..
I re-encoded as I noticed the default for Encore was 23.97 and as my footage is 29.97 (and output usually is 29.97 for DVD isn't it?) I wanted to see if it made a difference. And the answer is no...
Here is the preset I used:
Here is what came out (screen shot from playing via VLC):
And as a frame of reference, here's how it looks when I just let Encore do it's thing automatically:
I will try creating a new project and importing all the footage as fresh timelines, plus the main menu to access things, to see how an automatic encode changes via that workaround. Seems like an odd...bug? Lack of feature? not to be able to add things after one reaches a certain point in a project and having to start over from scratch (especially since I do a lot of tweaking of the menus by sending things back to Photoshop to get layout, highlights, etc just right and it's one of the features I love about Encore vs DVD Studio Pro or any other option I've looked at)

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