Well, I tried a quick experiment--I just opened up the Final Cut project and deleted the soundtracks that I had sent out to Sound Studio, amplified the volume, and brought back in.
After those soundtracks were eliminated, I exported the project from FC as a QT movie again and dropped it into iDVD and told iDVD to make me a disk image---and it did it, just fine.
Therefore, the trouble was my amplified sound files. Mystery solved. It was a sound problem.
Anyway, as for using YouTube mp4 videos in Final Cut, I've done it many times before and this is the first problem I've had. As you say, the quality of the video is sometimes terrible with artifacts and pixellization, but these are really just throwaway videos that I show in our history class and then junk. The narration is often more important than the pictures, and the whole idea is just to give the students some appreciation of certain aspects of history. We follow up each video with class discussions.
Now I've just got to figure out how to raise the volume of YouTube videos that are too quiet to hear in Final Cut, even with the audio level line raised to the max in the timeline. Final Cut is so full of features, only a fraction of which I use, that I wouldn't be surprised if there's some filter hidden in the program's menus somewhere that could raise the volume the same way Sound Studio does it. One thing is sure now, I can't use Sound Studio to do it, or iDVD chokes.
Thanks again for all the help.
Tom