P.Pro 1.5 - Losing quality in AVI/MPEG to DVD conversion

Hi, everyone.
Is my first time in Adobe forums and my english isn't certainly the best, so excuse me for something I'll possibly make wrong :-)
This is my problem:
I edit a lot of videos (holidays, weddings, karting, ...) from Mini-DV tapes. No problem on edit work, neither on export to AVI or MPEG. And at this point (after export) I don't think I had lost some video quality or if had that would be slight. But when I finished the next step (convert the resulting file to DVD format) I realize that video suffers from a substantial quality lost, mainly a distortion on whites (they get much brighter and, of course, lose some of its texture). Also, not always, is noticeable a kind of yellow and red thin lines along the "objects" shape (mainly on human faces).
At first I thought that was noting about Premiere and all about the conversion from AVI/MPEG to DVD because it's when the problem occurs, but after I had experimented all kind of converting software and the problem happens all times (sometimes more, sometimes less), I become to think the problem may be in Premiere exporting settings.
So, these are my Premiere exporting settings:
Export to AVI: File -> Export -> Movie
Some important settings:
                       General: File Type: MS DV AVI
                       Video:  Compressor: DV (PAL) - I'm in Portugal (Europe)
                                  Frame rate: 25 fps
                                   Pixel aspect ratio: D1/DV PAL (1.067)
                                   Recompress: Maintain data rate
                        Keyframe and Rendering: Lower field first
                                                             Optimize stills
                                                             (don't have Deinterlace Video Footage marked)
                        Audio: Uncompressed, 48.000 Hz, 16-bit, stereo, 1 frame
Export to MPEG: File -> Export -> Adobe Media Encoder
Some important settings:
                      Format: MPEG2-DVD
                       Preset: Custom (PAL DV 4x3 High Quality 4Mb VBR 2 Pass)
                       Video Summary:
                                                Codec: MainConcept MPEG Video
                                                Quality: 5.0 (high quality)
                                                TV Standard: PAL
                                                Frame Rate [fps]: 25
                                                Field Order: Lower
                                                Aspect Ratio: 4:3
                                                Frame Width [pixels]: 720
                                                Frame Heigth [pixels]: 576
                                                Bitrate Encoding: VBR, 2 Pass
                                                Minimum Bitrate [Mbps]: 1.5000 (low quality)
                                                Target Bitrate [Mbps]: 4.0000 (low quality)
                                                Maximum Bitrate [Mbps]: 7.0000 (high quality)
                                                M Frames: 3
                                                N Frames: 12
                      Audio Summary:
                                                Audio Format: PCM
                                                Codec: PCM Audio
                                                Sample Size: 16 bit
                                                Frequency: 48 kHz
                      Multiplexer Summary:
                                                Multiplexing: DVD
I also thought the problem could be on the hardware but a few months ago I made an upgrade on my computer and changed CPU, Motherboard, RAM and Graphics card (had an AMD Sempron 2800+, 2 GB DDR and an ATI 9600 Pro 128MB) and the problem still remains...
Actually I think it match all the needs:
CPU: DualCore Intel Core 2 Duo E6300
Motherboard: ASRock 4CoreDual-Sata2 (chipset: VIA Apollo PT880 Pro)
RAM: 2x 1GB DDR2
Graphics card: Asus EAH2600 512MB
Windows XP Pro with SP2
I don't care about time CPU will spend to do the task - before the upgrade it tooks aprox. 5 hours to convert a video and now it tooks only 1h30m :-). What is really important is obtaining the most quality DVD video can be possible. Can you help me?
Perhaps someone already asked for something like my problem. If so, please excuse me and give me the link to that question.
Many thanks to all of you in advance.

Dag Norum:
First of all, thank you for your quicly reply ;-)
Second, I'm very sorry to make a reply almost a month after your answer. The reason is that I went on holidays without an opportunity to test your tip.
I used Harm's link and than reached to a Bitrate of 8.0000 for all three fields (Min., Target and Max.) and that makes all the difference. Now I have a video with very good quality.
But I haven't tested your tip yet to see if that improves the video final quality.
I want to work always with the maximum quality, no matter what time is needed to convert the video and no matter the length (GB) it costs.
Do you think I can export to an uncompressed file (avi for windows and compressor set to none) and than make the Menus with Encore? It wouldn't be better work on Encore with an MPEG2 file? The DV compressor is MPEG2, isn´t it?
And why you suggested to not have the "Optimize stills" checked? This is to optimize the frames without movement, isn´t it? Many times I use photos inserted in the movie. This option isn't good for that?
Your last suggestion, to go directly from timeline to the end target (MPEG2) is much different than that I use (DV compressor)?
If you could answer my questions I would appreciate.
Many thanks!
(sorry if my english isn't the better)
Message was edited by: Warlord_LA   (01-Oct-2009   23h51)
Sorry, I'd made a mistake.  When I answer to you I didn't realise that your sugestions was to AVI exportation and not to MPEG2.
Of course you are absolutely right: for an intermediate file, no compression is always better than some compression :-)
But my question about not have the "Optimize stills" checked remains. What does it makes, really?

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