What is best encoding/sizing option?  Premiere Pro/Encore

I have heard some people say that assets should be encoded before being brought into encore, others say to use dynamic link.  If I am going to go the encode first route, I would do this in Premiere Pro CS5.
If I am taking a 720 X 540 (1.0)  30.0 fps 48000 hz Mpeg 4 asset and want to convert this to dvd what is the best setting in Premiere Pro?
Do I create a sequence which is 720 X 480 (0.9091)   29.97    48000 hz and then when exporting use the following settings:
Format  MPEG 2 DVD
Preset    Match Source attributes highest quality
Or do I change this to custom settings:
Format:  MPEG2
Preset   Custom
Change the quality setting to 5
TV Standard NTSC
Frame rate   Do I leave it at the default of 29.97 or do I change this to 30?
Pixel Aspect Ratio- Do I leave this at standard 4:3 (0.909) or change this to square pixels (1.0)?
Profile and Main do I leave these at the defaults?   Main
Does it make any difference if the ultimate output will be on a 25 GB blu ray disk?
Encore CS5
Premiere Pro CS5
Quad Core 2.4 GHZ
6 GB memory
Windows 7 64 bit
nvidia geforce 8500
700Gb free space on hard drive

Use an MPEG2-DVD preset.  DVD is very strict about the specifications of video files.  Using a generic MPEG preset allows things to be thrown off spec.

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