Does the video look pixelated on a regular TV set or only on your computer screen? TV sets have far less resolution than computer monitors and what's visible on them may not be apparent on a TV set. If the intended audience will only be viewing on a TV set, your DVD may be just fine.
Pixelation is usually caused by having too low a bit rate setting on the MPEG-2 compressor for the quality of the source video. Since there's only 4.3G of usable space on a single surface DVD recordable, long videos need careful attention to the bit rate. Typical rates on commercial DVDs are from 3000kbps to 9600kbps. Superlong playing DVDS may use 1600kbps to 3000kbps. A relatively new feature is to allow variable bit rates, hopefully using higher bit rates only where needed in the video to achieve good quality in a smaller file size, but that requires the compressor to make really good estimations of scene complexity to do a good job.
TMPEGnc, a stand alone MPEG-2 compressor (ttp://www.tmpgenc.net/e_main2.html), has a very good reputation for producing excellent quality DVD results. I have used it for a couple of years with no problems. It is a bit slow though.
Nero 6 Ultimate has an improved MPEG-2 encoder that seems to do as well, and is a bit faster.
You may want to check the available settings on your Movie Maker 2 for Variable Bit Rate encoding.
Fav quote - "Experience is whatcha don't get 'till ya don't need it no more."
System - Athlon 1.4GHz, Win98, Hauppauge PVR250 receiver and compressor.
Software -Magix Movie Edit Pro 10, Nero 6 + NeroVision Express, Moho 4.61, PSP 8.1, Bryce, Quicktime 6.52 pro, Goldwave 5, DVD-Lab.
Cameras - Panasonic GS9, Canon ES8400V, Canon EOS D20 and Canon A70