@Pulp Catalyst
1. Where did you get that AVI? It has a NTSC 23.976 fps source to be pulldown (AVStoDVD did that, see DGPulldown section) to NTSC 29.97 fps. If source video is smooth, then output mpeg2 jerkiness is very very strange.
2. DAR is 1.875 and not 1.778. If source image is not distorted, applying small black bars (10 pixels) up and down is correct.
@marius1
Just to be sure, have you switched on the subtitles when you have played the DVD?
Bye