Actually this may be a no brainer, but after having put 'pen to paper on here' i'm guessing the answer is going to lie in creating each sequence, once fully completed with effects etc saving the cut up sequence as a new DV AVI and adding it to a new 'final project' which i will cap at an hour long as i go yeah?
I'd also be inclined, once you have saved out your one-hour segment to use 'save as' to create a new copy project in which to do the next one hour segment. Just in case you discover later a problem in the earlier segment you need to fix.
Another variation would be to create your whole project in one project file. Then use the WorkAreaBar to highlight each hour and share from there to the DV-AVI file (checking the Share WorkAreaBar only box).
Insanity is hereditary, you get it from your children
This is basically how I edit for multi-disc sets. Now, I use PrPro most often, so everything can be in one Project, where with PrE, one does not have Sequences to work with.
I will edit each Sequence (think mini-Projects but inside a main Project), as a separate disc. In the case of PrE, this will translate to separate Projects.
If you have all of your material on one Timeline, and are not running into any Resource issues, there are two ways to accomplish this fairly easily.
One would be to use the WAB (Work Area Bar) to Export/Share a portion of the Timeline to DV-AVI, creating your 4 - 5 discs, and then Import each of those into new Project for the finishing touches and the authoring to DVD. This also allows you to use Chapter Markers in that new, Project (just a segment of the original). One caveat with PrE is that if one wants a Play All, then the use of Chapters will not work - it is one, or the other. To have it both ways, one could use a full-featured authoring program, like Sony's DVD Architect. For this, I use Adobe's excellent Encore, but it is not available as a stand-alone any longer, and is only available with PrPro.
The other way would be to edit that original Project, and then do a Save. Go into it, and eliminate everything but the material for that particular DVD, and do a Save_As, naming it say, [Project Name]_Disc_01. Then Open the original Project, remove everything but what you want on Disc 02, do a Save_As for it. Repeat. This gives you one advantage - everything is still fully editable.