Part 1. MPEG-2 is all that's allowed. You can of course convert from MPEG-2 to DV or MPEG-4, only to convert back to MPEG-2, but there is absolutely no reason to do this. It is guaranteed to reduce the quality of your video, and it is guaranteed not to have any other benefit. This is a general rule of video encoding: avoid unnecessary lossy conversions. They are the biggest thing that will introduce noise and signal loss. The only other information that applies in this case is that if you use DV-NTSC, you automatically lose half your color data, because MPEG-2 is 4:2:0 and DV-NTSC is 4:1:1 (why? who knows. PAL doesn't have this problem, but American DVDs are not PAL).
Part 2. There is an allowed range of bitrates in the spec, I think it's 2-12 Mbps. 2 looks absolutely horrible. 4 is minimum to look "good" on TV. Use higher if you're dealing with high-motion video. But don't take my word for it. The first step for all questions of video quality is to try it yourself on a short clip and see the results first hand. Also, you mentioned a standard definition set; obviously, all the settings apply only to standard definition, none to high definition, because these settings and standards were finalized years before high-def existed. DVD hasn't changed, and it can't change, because that would break all the existing hardware DVD players.
If you really want more length, and really don't care for video quality, you can encode to VCD-spec MPEG-1, which is allowed on Video DVDs. I forget all the numbers, I'm sure Toast knows them, but it's half-frame (a quarter the resolution), and you can get about 10 hours on a DVD-5. Again, the only really good way to get more video on there is to have a dual layer burner (or blu-ray I guess).