So if Best Quality uses a lower bitrate perhaps it should be called Less Quality
Bitrate isn't everything. A good encoder may well produce better quality with a lower bitrate than another encoder with a higher bitrate. And often good quality takes more time to encode, too.
I have done some tests and at least with that particular test material I got slightly better quality in a very few high-action scenes with Best Performance.
But since most of my DVDs are >60 minutes, I always use the Best Quality setting.
should a DVD from videotape have the same quality (good, bad or indifferent) as the original?
MPEG encoding compresses data so the quality will always suffer. But usually you don't notice it. It also depends on the input material: difficult to encode scenes include high action, noisy low-light scenes, water, smoke etc.
With Best Performance or with <75(-90) minutes' Best Quality the iDVD output quality has been OK for me.
But I'd wish iDVD used compressed audio because uncompressed PCM audio steals way too much bandwidth from video in long (90-120 min) DVDs!