Follow Ann's directions.
I find I cannot shut off the automatic transcode setting, now the burning process transcodes back to 720x480
This will not be relevant if you follow Ann's recommended work flow. But to help you understand what is happening, make sure you are looking at the correct "Transcode Status" column in the project explorer - DVD or Bluray. For transcoding, Encore looks to see what your project setting is. If you bring an HD asset into a project, set it to SD (or leave it SD), Encore will treat the HD asset as invalid and retranscode it.