What I typically do, and you can probably correct me on this, bring in the video, add a title or pop up video bubble, render and then save it as an AVI 720 x 480, when all me clips are saved to AVI i bring them back into a new final project in PE9, string them all together, place my dvd markers and then burn it to DVD.
That's fine, you shouldn't have any problems with that workflow. Creating subprojects and combining them in a master project is a common technique. it's especially good if you are making a long or complex video.
The subprojects using the high def avchd footage from your camcorder should use a project preset that matches that video. Since you are outputting each subproject as dv-avi, your master project to combine them and finalize the video should be a DV project preset. NTSC DV projects always use 720x480 pixels, but the pixel aspect ratio is different for widescreen(16:9) or standard(4:3). Choose the preset that matches what you want. I'm assuming you want the wide screen project.