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Do your edit in the native footage (i.e. HD.) Make an HD digital print (the entire project burnt out to an uncompressed AVI or Quicktime movie. Take that DP and then transfer it into an SD 16×9 version for DVD. When you’re ready to author you’ll have the HD version to use.
If you can set up your monitor via HDMI, that should be your first choice. If you have a RGB RCA cable to hook up to an HD TV or monitor if you don’t have HDMI. You need to view the HD footage on an HD capable monitor preferably in the native resolution (720p or 1080i/p.) When you want to see it in SD then use the SD version you made and reset your monitor for SD (720 x 480) to see it properly in that format.
But definitely do your HD cut first with any transitions and color-correction/grading in the native format before making an SD version.