When you dub tape to tape in analog fashion, there will be a generational lost. But when you dub your VHS tape over to DV, you stop the generational lost on the DV side. There's really nothing to do with DV's high resolution, but rather because it is digital. When you do DV to DV dubbing either by tape or computer, there will be little to no image degradation. Except perhaps tape age, stretching and DV transport misalignment (head and tape speed) which is a common thing with DV decks and camcorders!
DV is a loseless compression format which retains the original video image. If you want to shrink your DV, you'll loose quality. Video images will look softer, noisier and with compression artifacts. If you plan to edit, then finalize the project and then burn it to DVD, then you need to do a few transcoding and perhaps recompressions. If your source video is pristine, sharp and clear -- I say go for it. How much do you value your original clips?
Secondly, there is no easy way to automate this process unless you own a PC. I have a very fast Quad Core PC to do this flanked with RAID drives. There is also a faster way to do this using a hardware accelerator on the Mac (elgato Turbo H.264) but both ways are gonna cost you!
Best way to do this is buy something like a hard disk dock (Thermaltake Blacx) and store your footage in a bare 1Tb drive. The initial outlay on the Thermaltake is not a lot. Then, bare drives are cheap. This way, you'll be able to save the DV stream, which in effect is the same as your original DV tape.
When you finalize the project via share to media browser, the quality will be way better than when you transcoded and compressed the original DV clips to something else. Compressing DV clips is a high computational task, so unless you have an extremely fast Quad core i5/i7 or Turbo H.264HD, you're probably better off copying DV stream clips to a hard drive. At 13Gb/per hour, you can copy a DV stream over USB 2.0 faster than transcoding the same clip using Handbrake to H.264.
And YES, share to Media Browser works well with iMovie 11 to make good looking DVDs.