It's not just a matter of possibly giving friends and relatives 3 or more DVDs, if you are talking about hybrid discs, then all your friends and relatives will have to have a Blu-Ray player which is also rated to play hybrid discs. Apparently not all of them can. The Sony PlayStation 3 certainly can, though.
As for your last question, essentially you hit the nail on the head when you asked if they can do things we amateurs simply can't afford. In the first place, they use sophisticated multi-pass encoders, costing hundreds of thousands of dollars, which analyse the video down to the last blip, and calculate the best way of squeezing in the data in the best possible way. We amateurs, on the other hand, get at most two passes. Moreover, commercial DVDs are pressed, and not burned. Those two factors are enough to make all the difference, quite apart from the sophisticated cameras etc used in the original filming of commercial videos.
As for the steps you take with your HDV footage, you can do it in one of two ways. First, you can put the HDV footage in the main timeline of VS, and then choose Share > Create Video File > Custom. A dialogue box will appear and you need to ensure te Save As Type box is set to mpeg. Give the file a name. Then click the Options button. A new dialogue box will appear. Select the General tab. Make sure Upper Field First and 16:9 are selected as well as the PAL frame size (720 x 576) and rate (25 fps).
Then select the Compression tab. Here you have a couple of choices. For best quality you slide the top slider from default 70 to 100. This will nominally give you a little more quality but the rendering will take longer. You could also tick the Two Pass Encode box. This will mean VS will make one pass over the entire video and analyse it, and in the second pass it will apply the best formula for processing it which it can come up with. Again, this will extend the processing time. Set the Video Data Rate to 8000 kbps, and choose whichever audio format you want. Click OK to get out of that dialogue box, then Save on the original dialogue box to begin the conversion process.
As I said, it will take some time. At the end of it, though, you will have a high quality DVD-compatible mpeg-2. Note also that after you produce your new mpeg-2, you go to File > New Project. Don't worry about giving your new project a name. The objective is just to clear the timeline of your current project.
Once that is done, you select Share > Create Disc > DVD. The burning module will open. Use the Add Media button at the top to insert your new mpeg-2 in the burning timeline. Then go to the middle of the three icons in the bottom left of the burning screen. There is a little box beside the words 'Do not convert compliant mpeg files'. Make sure that box is ticked (it usually is by default). That way, your already compliant mpeg file will not be re-encoded. Then build your menus and burn.
The other way should work too, but could possibly be a little riskier. You open VS, then without doing anything else, immediately select Share > Create Disc > DVD. The burning module will open. Then you can insert your HDV files directly in the burning timeline. Since they are not compliant standard definition mpeg-2, they will be converted as part of the burning process. But you need to click on the second of the three icons in the bottom left of screen (the Options cogwheel icon).
A big dialogue box will appear, and in the window at the top, there will be a set of properties probably very similar to the actual properties of your HDV files, or else reflecting your default project property settings. Click on the Change MPEG Settings button below that window, and then Custimize. A new dialogue box, rather like the one described in the first workflow above, will appear, though with only a General and Compression tab. You use the same settings as I described above. Then OK out of that box and OK out of the original. You are back in the burner module. Build your menu and burn.
The only reason I said this is riskier is that the down-conversion process is a complicated one, and I think it is best done as a separate step as described in my first suggested workflow so as not to put too much stress on computer resources. If you follow this second workflow, then you are asking your computer to carry out this complex conversion as part of the burning process, which is already complex enough as it is. Sometimes, computers just can't keep up with all the demands, and keel over. Hence my preference for the two separate steps. You also don't save any time using the second workflow since the conversion still has to be done and it will take exactly the same amount of time as if it were being done separate.
Good luck!
