"Why doesn’t my exported 16:9 material work properly in iDVD?”
First you have to export you edited 16:9 (anamorphic) DV material from Final Cut. To do this use Export>QuickTime Movie. If you're going to make the DVD or disc image right away, you can make it a reference movie, not self-contained. If you're going to continue work on the project or build the DVD elsewhere use Make Self-Contained.
iDVD doesn't support anamorphic material, only native widescreen. It works with widescreen HDV material but not with anamorphic (squeezed) 16:9 DV material. To make iDVD work properly with this format you need to use either myDVDedit or Anamorphicizer to make iDVD work properly with this material. I like myDVDedit better, but you can use whichever you prefer. They both work well.
You can also do this with the QuickTime Pro player if you have it.
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1. Open the exported file in the QT Pro player.
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2. Go to Window>Show Movie Properties (Cmd-J).
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3. Select the Video Track and in the Visual Settings panel uncheck Preserve Aspect Ratio.
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4. In the Scaled Size box set the width to 853 pixels for NTSC or 1024 pixels for PAL.
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5. Save the file and import it into iDVD.
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