Hi Joselan, and thank you,
1. You should always set your properties to match throughout your workflow. If you capture to DV then your project settings should be DV-AVI. Then the method used by most is once all editing is complete, go to Share>Create Video File, and create a DVD-Compliant video file, either NTSC or PAL. That DVD Compliant video file is used in the final steps, to burning your DVD.
2. DV-AVI or MPEG? That has been a long debate, and the jury is still out. There are several people that agree that DV is preferred when doing much editing to the video clips. While editing MPEG video clips can be done, you risk loss of quality and audio/video sync. I prefer to edit DV.
3. I probably should have worded that differently. The 16:9 is used for when your recorded video clip, the one you are going to capture or ones you intend on editing,
are 16:9 ratio. You can not take a 4:3 clip and make it 16:9. Doing so results in fat people in your video clips..
4. NTSC vs PAL quality: No difference. These are based upon the TV standards for given parts of the world, and has more to do with electricity flow. For instance here in the US, electricity flows at 60 cycles, and I know it is different for the U.K., however don't recall what it maybe. Also NTSC uses 29.97 frames per second video at a common resolution of 720 x 480, and PAL 25 fps at a common resolution of 720 x 576.
Hope that helps...
Ron P.