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Recapture using hardware rather than software, and at DVD specs - 720 x 480 at 29.97 fps.
... or use a program like VirtualDub to preconvert your video to match your project settings (such as 720 x 480, 29.97 fps).
In any case, I believe the "strobing" effect you're seeing is because Premiere enables frame blending by default when the source framerate does not match the project settings. Right-clik the clip on the timeline and uncheck frame blending.
Ok, well, I just used ProCoder to try converting the captured footage to the same as the project settings (720x480 29.97 interlaced) before importing it into the project and I'm going to try that. Unfortunately, I can't recapture the footage because it was at a live event that can't be replicated.
Well, it turns out that the "strobing" effect was just a problem with our client's DVD playing software on her laptop. I burned three different discs for her trying to solve the problem and finally ended up traveling up to her office after the third one didn't work and she was getting frustrated, blaming us.
I took one look at the playback on her computer and knew it wasn't a problem with the disc. I went into her settings in her software and turned off hardware acceleration. After that ALL of the discs I had made for her worked fine.