Matt,
Your hint about iTunes "Get Info" has allowed me to answer my own question. Thank you. The audio is extracted at 16 bit 48 KHz. This is true even if the original audio was analog 8mm, as with my old 8mm 2 hour tapes that I imported to iMovie with a Sony Digital 8 Camcorder. The extracted audio is COPIED to another track, and the original audio is muted. It is not deleted.
Of course, my original mystery still reamins: Why is the audio "out of sync" on my iDVD 6 projects, when this process seemed to remedy the problem in iDVD 4?
Part of the problem, I believe, has been alluded to in other posts. Becuase iMovie 6 now imports up to 1 hour clips at a time (as opposed to the old 9 minute plus limit), and "Extract Audio" extracts audio from the entire 1 hour clip, not the clips that are user "Split At Playhead", there is some sort of performance penalty. This penalty may cause the end problem of "audio out of sync" on iDVD 6. I know "Extract Audio" from these old analog 2 hour tapes now takes hours instead of minutes. I am using a external drive, but this didn't cause any problem in the past.
At least this part of the puzzle has been answereed. Thanks again.