The best possible quality you can hope for in MPEG2 is to use a codec that allows multiple pass variable bitrate encoding.
Quicktime's MPEG2 codec does a very creditable 2-pass VBR option that turns up hi quality DVD images from DV stream source.
As lacero notes, you will need to export the video and audio separately, and the audio must be at 48Khz.
DVDSP 3 onwards will do the encoding for you if you import DV stream footage, but it still uses the QT codec and I'd rather see whats going on as the process continues.
Is there a particular reason you wish to use non-self contained? DVDSP will always need the MPEG2 code no matter what the front end codec is, transcoding from the source directly to MPEG is the cleanest way to go.