If you're going to convert to DVD, then your finished film needs to meet the PAL DVD standards. In that respect, you have no choice but to use a 720x576 framesize.
Concerning encoding times, again this varies greatly. It depends on a few factors such as the method of encoding used. Broken down into it's simplest form, you have Constant Bitrate (CBR) versus 2pass Variable Bitrate (VBR) the later will always be longer than the first as the software analyses the video in the first run, then varies the bitrate accordingly when actually encoding for the second run. There are then varies other settings (most of which I won't even pretend I understand) that can speed up or slow down the encoding process with at a trade-off with quality. Moreover, if you're applying frame rate conversion and or other filters on top of this, I would have thought encoding times would increase (but don't have empirical evidence to back this up). I would have thought encoding times would go up if you haven't previously scrubbed the timeline, so I guess this must be true!
Finally, encoding is CPU intensive and hoggs resources. If you're actively running other applications, less CPU processing is spent on the encoding process and the encoding time will increase.
So, to summarise, if I was editing the footage, I'd convert to DV AVI then import this. Infact, this is what I DO do when given analogue footage that's all screwy
