Do you have any situations where there is more than one video file in a timeline?
Secondly - why are you using H264 HD files for a DVD? This is using lossy compression to make the H264, which is in turn then scaled & even further bitrate reduced for M2V.
I would give it a try rendering an SD video file for use in Encore - not the H264 - and starting out with Dolby Digital or LPCM audio, not AAC.
As with all DVD authoring programs, Encore works best with DVD compliant assets - which you are most definitely using - but I still think you are over-complicating things by using H264/AAC at all.
Eliminating this may help.