If you are in Final Cut Pro you just make a self contained movie from or if it is just a quicktime file you just import it in DVDstudiopro and it just handles the HD file to a SD dvd. Voila
DVD Studio Pro can encode your movie files yes, but it is not really advisable to go that route. If you have an HD project, just go File > Export > Using Compressor. Use any of the SD presets and Compressor will do the downconversion for you. It'll be very slow, but it'll get it done. This is more advisable over letting DVD Studio Pro do it because you'll have more control over various settings (whereas in DVDSP its pretty much, let it do it in the background and pray to god it doesn't look like ass in the end). Good luck.