The smartest way would be to use a program like Sonic MyDVD, which uses smart rendering and so won't re-render your original MPEGs when it creates your DVDs. (Premiere Elements would convert those MPEGs to AVIs and then re-convert them to VOBs, so it's not your best program for doing this.)
VCDs used MPEG1s, usually at a lower quality, than DVDs. The quality is generally not very high. So I'd try to minimize the re-rendering and re-compression to avoid further decay.