I agree with Jeff. I'll add that the "poor" image in the side by side comparison looks VERY good, considering that it is DVD sized being put onto a 40" and presumably at least 1920x1080 pixel screen. (It is DVD size?)
Export video once at DVD size, and create menus at the correct size so Encore won't mess with them any more than necessary. Use an upscaling player to maximize quality of a DVD on an HD TV.
If you are really looking for nice output on a large monitor or TV, stick with bluray.