Yeah, I always create such assets at the target res, so as not to loose quality in resizing, but they still look pixelated. Is there a secret to getting smooth text at DVD res?

ruffcut in FCP/PP CS5 --> to AE (colorfinesse, MB looks) --> render lossless master. From this point it really depends on the output format. Vdub is only one route, but its free, renders quick and just gives you the control you need.

I render out a graded Lagarith 1080p master, then trow the avi into Virtualdub, apply MSU Sharpen at "Small overall and border" then resize (lanczos3). Lagarith might be overkill, but its does not hurt as well. The result is again.. Lagarith, this time in SD and looking nearly oversharp when watched on computer screen.
@nomand is right if he says that you should only apply the absolut minimum of artificial noise. I know it tempting, I like noise as well.. but it will simply eat up your details due to the limited MPEG2 bandwidth on DVD.

@Meierhans

What tool do you use for your Lanczos3 resizing? Which 4:4:4 codec do you use? I don't see why so much color information would make for a cleaner compression. I understand noise being a problem with compression. I usually use NeatVideo to clean up my noise and then reintroduce film grain in the MPEG encoding stage if that's the look I'm going for. That's what I always thought about hardware solutions, they are just faster than CPU based programs, but essentially the same thing.

@kupchenpo Resolve is much faster than CF on the same hardware, offers far more adjustments than Colorista but is a bit harder to learn.

@Oedipax You can grade in HD to have a perfect master and render different versions from the same TL.

@Namad
Fantastic, downloading now. I'll try it out and report back. I've always wanted to play with Resolve. How does the free version compare to programs like Colorista or Color Finesse for grading?

@ Oedipax
Those are both MPEG encoders. I have CinemaCraft, it's a good encoder, but it doesn't resize. I'm taking the quality hit on the re-sizing, not when I encode to MPEG.

What would the Resolve workflow look like, assuming all you want to do is downscale your 1080p master for SD? Just load it all in as one shot, set up a 720x480 (or 720x576 of course) timeline and render it back out?

I use Resolve all the time for grading now but this downscaling thing intrigues me. I was never really pleased with how my stuff looks on DVD, despite owning many finely-mastered DVDs so I know it can be done.

@ Nomad
I'd love to try Resolve but I'm a PC guy and so it's not an option right now. I'm doing my sharpening in the MPEG encoder (cinevision) and that helps a lot. My main problem is with pixelation. All of these workflows are vastly better than going MPEG straight out of Premiere or letting Encore do the resizing and encoding, but I'm still getting pixelation on things like side profiles, text, and thin objects. I know that's part of the game when going that low res, but I've checked all of my hollywood DVDs and I don't see any of that in any of them, so there must be a secret to avoiding it? Is it a degree of blurring to make the gradient between pixels blend?

@Vitaliy
I'm pretty sure all of the adobe products use two pass bilinear, is there a software that does it better?

DaVinci Resolve has some of the best scaling in the industry – now for free. But what exactly was your problem?

The tools you tried were not really bad. BTW, sometimes SD needs a tiny bit of edge enhancement, it's resolution is just so low…