I was under the impression from most of the "conversion to DVD" guides out there that if your source is interlaced you do more damage to the quality by de-interlacing (which is never perfect) and generating a progressive DVD.
It is also unnecessary since the final output device will most likely be a television and therefore an interlaced device.
It is considered preferable to capture, and encode retaining the interlacing and to only use progressive if your source is true film (which a laserdisc is not).
I won't argue (although it does sound like I am) since you guys have done more of this than I have, but I find it hard to believe that so many guides (from reputable sources) are wrong.