Did a film several years ago in SD. Have mini dv of cut. Want to replace music and reissue for DVDs and screenings. What format should I use in FCP -- Prores? I know that would mean losing top and bottom frame in 16x9

If its already in DV you should edit in DV. I wouldn't recommend letterboxing SD footage, the lose of resolution would yield poor results imo.

Another vote for editing in DV IF you don't plan on making drastic changes to the VISUALS (you mention audio changes).