I use a Sony HDV camcorder and Premiere Pro 2 and never touch m2t files (unless I have to - which is never).
I capture and edit using Cineform's Excellent Aspect HD tool/plugin. I always edit high def as 1080i. Once my timeline is ready I simply use the Media encoder to export to m2v and wav files as SD PAL (widescreen) - typically with default settings. These, as you say, plug in to Encore DVD and I;ve never had issues yet or anyone whinge about quality (except myself when I messed up the capture once but that's a different story).
I have never exported as m2t files and can't see a need to do so if I'm honest.
Possibly you may choose to export as AVI and let Encore (or some other app) do the encoding to MPEG2 for DVD authoring. For historical reasons (relationg to both Matrox hardware and early Encore DVD [versions 1 and 1.5] 'features') I tend not to do this though.
It's all go here I can tell you!
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