i will start off by saying i have searched this a lot-both on here and on other sites-and haven't really found answers that i need.

i am producing an outdoor dvd that will be about 2 hours and the majority of the filming was done by people with SD cameras (xl1s, pd170, etc). About 25% was done by people with hd cameras (mostly xha1's recording in hdv -1080 60i, but also one person who used a camera that recorded AVCHD)...

I am currently editing this project and running into difficulties. last year it was no problem, as everyone shot with SD cameras...this year...not the case.

i am running the new final cut studio 3, with snow leopard on a mac book pro (2.4gh, 500 gig internal 7200 drive with a 7200 2 TB capture drive, and 4gig ram)...

i'm obviously editing the sd in an sd timeline and have already captured the hdv as hdv and edited it on an hdv timeline, then copied onto an sd (4:3) timeline and it doesn't look good..

what is my best option for editing my material and then delivering it via dvd (will use dvd studio pro)...i want the best picture possible...thanks in advance

First - I would cut in HDV - Or rather at HDV resolution.
Drop your first HDV clip into FCP and hit YES.
Hitting Apple+0 will get you to your Sequence Settings.
Change the Codec from HDV to ProRes 422 (Not HQ).

Under Sequence - you can conform and scale your SD to your HDV Spec 1440x1080.

Then Re-Render.

ALTERNATELY - you can bring all your footage into Compressor and re-encode to ProRes (this takes your footage out of HDV and DV before you begin editing).
This workflow will yield better editing performance with less time spent rendering to the ProRes codec - this is also the route I would take if I were in your shoes.

Most editors always cut in their highest spacial resolution - yours is 1440x1080 - then they down convert when it comes time to deliver (ie - web or DVD).

The only other issue you're going to encounter is re-framing your 4:3 stuff into a 16:9 (which IMHO is better than letter-boxing in SD).

Hope this helps,
-C