PRE7 cannot do this (not sure about PRE8) but many software DVD Players can (CyberLink PowerDVD for example has an A-B repeat feature).
Insanity is hereditary, you get it from your children
You're right, Neale. You can't do this with any version of Premiere Elements.
There are ways to hack the DVD file -- but, as Neale says, the easiest solution is just to set your DVD player to repeat.
Many other DVD authoring programs can do this for you, without having to hit Repeat. However, that is the easiest way to do it - one button on the DVD player.
To do the creation of a Looping DVD-Video in one authoring program, Encore, you just set your Timeline (with your Video file on it) as Play First, and then set its End Action back to itself. Done. It should be similar in programs like Sony DVD Architect.
Using a full-featured authoring program would mean several things: you need to buy that program. You need to Export/Share from PrE in a format that the authoring program can use, and then you need to Import that/those file(s), into that program, and make the navigation do what you want.
Personally, I'd just use Repeat, and I already have and know Encore, but I'm lazy. If your DVD player does not have Repeat, I'd look into Sony's DVD Architect. It is not expensive, and seems to do a great job. It is also a pretty full-featured authoring application.