The settings of the project don't matter as much as you might think. The settings of the sequence do. It is easy enough to create a sequence from a photograph and the settings will be perfect. Read this: http://forums.adobe.com/message/3804341#3804341
If you are shooting pictures like I do, they are 3:2. That ratio does not exactly work on a DVD. You can make it work by editing in a 3:2 sequence and then when you are finished you can do any number of things. You can nest your sequence into a 4:3 or 16:9 sequence and you will have choices to make. Do you scale the images down until you see everything but you have black bars, or do you scale them down to fit the sides but that means cutting off the top and bottom.
The problem is that there is no way to publish a video on a DVD with a custom shape that I know of. Someone like Jeff Bellune might show up and provide an answer. He is an expert DVD guy.
I don't know how you could get a DVD to play a 3:2 ratio video, but for YouTube it is a simple matter of using the pictures to create the sequence.
Then all you need to do is export using a 3:2 ratio, like 1620X1080, meaning you might have to unlink height and width. I have to tell you that you can upload a 3:2 video to YouTube but YouTube will play it back in a 16:9 frame amd leave black borders on the sides. I just checked.
You see, video is 16:9 or 4:3. Photos are 3:2 or so. Now, my new camera can shoot 16:9 photos, and some people shoot that way to avoid the problem you have right now.