Ironically, I find the way DVD SP handles overlay maps in PSD files to be much more versatile than Encore. Why? Because Encore, rather than offering that model as a possibility, actually forces you to use it. I couldn't find in Encore an alternate method for loading a subpicture image, other than the PSD layer naming convention.
In DVD SP you can design the entire menu in PS if you want, and include all highlights in a particular layer: it's actually simpler and easier. DVD SP lets you choose that layer, any layer as long as the highlight color mapping system is used, as the overlay map.
Encore, on the other hand, has this specific naming convention. So picture this case: you design an amazingly comple, fantastic DVD menu in After Effects, Motion, or better yet, a true 3D application. You are then forced to use Photoshop to generate the highlights and use its' layer naming convention. This happens even if the original wasn't made in Photoshop and thus the most suitable tools are not there: How the **** do you match 3D perspective in Photoshop, so that the highlights fit the the perspective of the cool 3D animated menu? I mention this example because I think it's really clear, but replace it with any other.
In DVD SP, you can load a standard 2 bit b&W overlay map from the 3D or motion graphics application, where the original objects "live". Notice the difference in flexibility. This is the way professional DVD authoring tools work. On the PC, DVD Lab Pro works in this way too.
In other words, DVD SP's paradigm provides a lot of flexibility to use Photoshop or ANYTHING else. In Encore, you're kind of forced to use Photoshop (or AE, that also can generate Encore-ready Highlights), even when it's not the application you use to generate the content.
However, there is a way in which you can use Photoshop and a specific naming convention to create button styles, ie, those button presets you use when you design the menus from within the DVD SP design environment (not my favorite option). This method allows you to generate layers for Highlight, transparency mask, Button graphic, and even the Icon DVD SP uses to show the button.
Hope this helps.
