This is an old issue, but one that still comes up. I found this thread looking for a solution (which is not listed here), and am coming back to it now that I've found a satisfactory solution. The "solution" in this thread seems to be just an acceptance that some players and TV's display things incorrectly, but I think there is a more solid answer (though the fact that players/tv's display according to their respective settings is certainly true).
I had created a "wide screen" DVD of 20 or so video clips. Some of the clips were shot 4:3, some were shot 16:9. When viewing the DVD (which is created as 16:9), there were still a few videos displaying 4:3 stretched to 16:9 rather than "pillar boxed" so there was no stretching.
Most of the clips were also rendered out of Premiere with the correct MPEG-DVD settings so that no transcoding was needed.
However, a few videos were still being transcoded by Encore, and this is where the problem was arising.
The solution for me was to go to those videos, right click on the video asset (not the timeline, but the actual video), "revert to original," and then "select transcode settings." From here I could set the transcode setting as 16x9 HQ DVD instead of "automatic" so that the final video output was widescreen instead of the 4:3 that was getting stretched (Encore wants to leave a 4:3 original video as 4:3, which might make sense, but is not what we want for a 16:9 DVD!).
Hopefully this information helps someone find what they're looking for.