Regarding the DVD quality, you will have to tell us about a bit more about your render settings. Blurry text often points to wrong field settings. For YouTube, you should easily be able to re-use your DVD animation by nesting and fitting it into a respective comp, so in my view there is no need to build anything twice, assuming you retain the proper pixel and comp ratios throughout.
Mylenium - thanks for the response.
You said something key -
For YouTube, you should easily be able to re-use your DVD animation by nesting and fitting it into a respective comp.
I did the opposite. I STARTED with the 480x360 and then nested that into a 720x480 comp. I had to scale to 135% x151% to make the first comp fit the new comp dimensions. I kept everything square pixels throughout - from PSD to AE. Yeah - there was distortion!
What should I have done?
Of course, you should do the opposite or the NTSC-sized Comp will be pixellated. Create the Comp using the NTSC DV preset, then nest it and fit it into a 480x360 Comp (actually, if you use 480x360 you will probably get black bars, ie "pillarboxing", on the sides. 480x356 would match the original frame aspect better).
Use the first Comp to render a master file for DVD authoring, used the nested Comp to render a file for the web.
To support what the others have said:
"If you’ll be rendering and exporting a composition to more than one media format, always match the pixel dimensions for your composition to the largest pixel dimensions used for your output. Later, you can use output modules in the Render Queue panel to encode and export a separate version of the composition for each format."
(from "Planning your work", a section that I recommend that everyone read before they spend a lot of time animating in After Effects)