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Just to clarify, by DV I refer to standard definition as opposed to high that is: when editing a standard definition project using HD footage. Any solution for outputting standard definition from the sony high definiton source would be welcome.
From what I've read, the better method may be to edit in an HDV preset, then bring that into Encore and let it downconvert to DVD.
I ran into a similar problem which occured because I was dragging the HDV project sequence onto the DV timeline. If you double-click the HDV sequence in the project panel it will arrive on the timeline uncropped.
Scale to frame size.