Yes, iDVD compresses to MPEG-2 when you actually burn the DVD from WITHIN iDVD.
When you are finished with your iDVD project, you can burn it to a recordable DVD disc.
Burn a disc only when you are sure that you are finished with your project. Because it can take some time to encode and burn a project, you want to make sure that you don't discover errors in a project later and then have to burn the project again.
iDVD can write to DVD-R, DVD-RW, DVD+R, DVD+RW, and DVD+R DL (Double Layer) discs. Make sure that your SuperDrive can burn discs in the disc format you choose. For projects that can fit on a single-layer disc, DVD-R is the recommended disc format.
Before burning your DVD, be sure you have at least twice as much free space as your project uses available on your hard disk, to allow for encoding and burning. Check the DVD Capacity meter in the Project Info window to determine the size of your project. For example, if your project uses 4.0 GB, you need at least 8.0 GB of free space on your hard disk.
To burn your DVD:
Click the Burn button to indicate you are ready to burn.
When prompted, insert a recordable DVD disc into the drive.
If you insert a rewritable disc (DVD-RW or DVD+RW) that isn't blank, iDVD asks whether you want to erase the disc.
iDVD first encodes your project's information and then burns it to the disc. Depending on the complexity of a project, some projects may take longer to encode and burn. iDVD shows the progress of the encoding and burning as it happens.
The time it takes to burn also depends on the speed of your computer and SuperDrive.