Let Compressor do the down conversion from HD to SD when it makes your MPEG-2 files for SD DVD authoring. You'll use the "Send To" function directly from your FCP Timeline window to Compressor, and select an SD DVD format that matches your project most closesly, then tweak for optimum image quality/file size balance. You'll get the best image quality. Compressor does take forever to convert HDV to any non-HDV format, do to the Long GOP format of HDV. It just takes more time to deal with.
Dropping an HD Sequence into an SD Sequence in FCP will work, but you won't get the best image quality.
All covered in my DVDSP tutorial.
Also, there's a book that's only 20-something dollars (USD) that is invaluable. "Compressor Quick Reference Guide" It has the best information in it, and will save you tons of experimenting time, and give you a clear understanding of the whole process in very little time.