Encore will only try to re-transcode an MPEG-2 file in 2 circumstances.
1 - The asset is not properly DVD-Compliant.
This could be for several reasons, the most likely offenders being either too high a bitrate or an incorrect GOP size. DVD-Video limits us to a total
i combined Audio & Video
bitrate of 9800 kbps, or 9.8 Mb/s. This is also a peak value, not an average one. The easiest way to check the bitrate is with the excellent "Bitrate Viewer" available from http://www.tecoltd.com/bitratev.htm
2 - The total combined bitrate of the Audio & Video files
i on the timeline
exceeds the maximum bitrate set in the Project Settings (Advanced).
If, for example, this is set to 7Mb/sec, and the peak rates when combined
this number, Encore will re-transcode.
The only solution in both cases is to re-transcode the original source file to MPEG-2 or else to use the uncompressed asset & allow Encore to transcode automatically.