There's nothing wrong with Premiere's MPEG export if you want to watch the final product on your computer screen. The problem lies with using Premiere's MPEG encoder to use for DVD formatting to play elsewhere.
MPG/MPEG is a compressed version of, for example, an AVI. When you compress video, you lose information that you will never recover. That is true 100% of the time. That is why it's also a bad idea to edit MPG files within Premiere. A side note here, output to MPG a project with video and audio within Premiere. Start a new project and import that MPG file. Then output a second MPG. Compare the differences. The second one will be noticeably worse because of the continued degradation from the original video.
Here's the good news, there are third party MPEG encoders that are able to compress the video so that it's difficult to ascertain the lossiness in the MPEG video. (Still can't edit it very well though).
It's been my experience, and numerous others on this board and elsewhere, that using Premiere's MPEG encoder will result in a bad quality DVD. It will work, but you won't like the results. A popular third party encoder is the TMPGEnc...it produces great results.
Search this forum on the topic of MPEG encoding in Premiere. You may be surprised.