720x480 is max. resolution for a NTSC DVD. Because 720x480 is not 16:9, the content on the disk must be stored horizontally compressed, If the conversion from 1920x1080 down to 720x480 was correctly made.
So the native 720x480 pixels should look like this, horizontally compressed
and players strechts this to 16:9. There should be “Display Aspect Ratio” (DAR) value when you check the file with MediaInfo, this says players “stretch this to 16:9”, then it looks like this on screens
So first you have todo is check if the 720x480 content is horizontally compressed or not, if its compressed, stretch it with Avidemux, Virtualdub, Hybrid ore something else. Do not stretch to 853x480 go to 864x486 because this is exactly 16:9 and codec friendly, produces no floating points.
If 720x480 content is not compressed as in the sample above, then it’s bad. What you can do here is crop on top and bottom until it fits 16:9, but you loose content OR leave video as it is and add letterbox left and right until it fits 16:9, this is often the better way.