Toast won't convert MPEG1 to MPEG2, it will import footage directly (well, Toast 6 will) from your camera, but it isn't an easy experience.
If you have iDVD, chuck the MPG's into that, design your DVD, and burn, iDVD will encode the content to MPEG2 during the burn (or in the background as you design if you want), and you'll have a DVD most players will play.