iDVD does not work with file/project size. It's only concerned with the playing time of the media used including menus. You can burn up to 2 hours using Professional Quality.
This post by Bengt Wärleby describes it better than I can: I'm getting poor quality DVDs from i: Apple Support Communities
In additon be sure to read iDVD '09 (7.x): About preparing QuickTime movies to work with iDVD
I advice you to use Brorsoft Video to iDVD Converter.
With it, you can convert video to the best format for burning to iDVD on Mac OS X. iDVD only supports video or image files supported by QuickTime. You can use the tool to convert video to QuickTime MOV file.
For best results, in the QuickTime export settings of your video editing application, choose NTSC-DV with a frame rate of 29.97 or PAL-DV with a frame rate of 25. Choose No Compression for audio, and set the sample rate to 48 kilohertz.
1. You can drag a QuickTime movie file to the audio well in the Menu Info window or in the slideshow editor. iDVD uses the first audio track in the file as a soundtrack for the menu that is open or for the slideshow and ignores the video. For more information, see Related Topics below.
2. If you share an iMovie HD project as a QuickTime movie using the Full Quality option, iMovie HD doesn’t include chapter markers in the QuickTime movie.