Timelines keep switching ratio (dimensions) when I build a disc

Question

Just started my first project in Encore and I have to say it is the most rediculous program I've ever dealt with. This is the fourth time I've tried this:
1. Start a completely new "Project" (Blu-ray > NTSC > 1280 x 720 )
2. Drag my menu.psd to the "Menus" panel.
3. Drag my clips (.mov) to the "Timelines" panel (Encore creates timelines for each clip).
4. Set up my flowchart
5. Check the ratios of my timelines (AGAIN!). “Yep — 16:9.”
6. Preview the project (Shift + Space). “Yep — everything looks good.”
7. Build the disc
8. Wait an hour
9. Disc is done
10. Check the disc. “The menu looks good. Oh, wait... what's this? The ratio of my clips are suddenly set to 4:3!”
11. Go back to the project and the timelines now show 4:3 ratio in their properties panels.
12. Punch another hole in the wall.
Any ideas? One possible problem I’ve considered is that the dimensions of my clips are 960 x 540. But my menu.psd is also 960 x 540 and it does not change proportionally on the burned disc. From what I can tell and what I've seen in tutorials and posts, is that there is no way to make custom dimensions and that the best thing to do is use the closest preset dimensions that are at least as big as your video, so I use the 1280 x 720.
Another funny aspect to this is that, if I close the project and reopen it, the ratios of the timelines revert back to 16:9.  ...makes sense, right?
I keep using the Blu-ray setup because the DVD options in the New Project dialog doesn't let me change any options.
Please, save my computer before I start stabbing at it with a knife.

Answer 1

In AE, I have imported .mov files with embedded audio that are 960 x 540. When I render the composition, I choose "MPEG2-DVD" from the "Format" drop-down and, immediately, I get the "Settings mismatch..." alert at the bottom of the Output Module Settings prompt window.
Hover over that "mismatch" message, and you'll see that it is warning you that your 960x540 (square pixels) is going to be resized to 720x480 (par 1.21). This would be okay if you are going to DVD.
I realize that I don't know whether you are actually going to DVD or Bluray. If Bluray, choose H.264-Bluray.
But if you go to Bluray, unless you keep the DVD size, you are going to  uprez and risk quality issues.
In any event, once you decide on a format, in the format options, click the "resize" box, and select what you want.
Bitrate Encoding: VBR, 1 Pass
Minimum Bitrate: 1.5
Target Bitrate: 9
Max Bitrate: 9
Having a target and max the same effectively makes it CBR at that rate. If your project is under about an hour, you can do this. If not, pick a target that is more modest (e.g. 6 or 7). I would raise the minimum to 3 or 4.
Having said all of this, AE's reputation is that it is not a good MPEG encoder. You'd be better off to use Adobe Media Encoder, or just dynamic link to Encore, set the preference for Encore to use AME, then use "Transcode Now" to transcode your movie.
There are many different paths to get to Encore.
In Encore, I dragged the .m2v files into the timelines panel and the .wav files into the project panel and then into the appropriate timeline (because the audio doesn't show automatically on the clip's timeline).
That method is fine. I just use "import as timeline," and select both. But I like your method; just select the m2v and the wav and drag both into the timeline panel.