I've had a similar problem. I have a dual G5, with Mac OS X Panther with the latest update, and with the latest version of iMovie and iDVD. And my problem was that iDVD would freeze everytime I tried to burn a DVD, regardless of the amount of video that i tried to fit on the DVD(I've tried it with 5 minutes of video and with 56 minutes of video) It would always freeze during the asset encoding stage (stage 3), and the mouse cursor would freeze at that point too, and I was unable to force quit the program, and so I would have to power down and restart to get the computer to work again. I have successfully burned DVD's before(using preinstalled versions of iDVD and iMovie), with the Jaguar version of OS X that came installed with the computer a few months ago. I was hesitant to reinstall the Jaguar version of OS X now as a possible fix to the problem, because I have about 70 gb of video on the hard drive which I don't want to wipe out, plus I paid for Panther and for iLife and it's supposed to work. My first guess regarding why iDVD would freeze, was that the hard drive was going to sleep, but that really doesn't make sense- because i only have one hard drive and the encoding process would be reading data continuously from it(via the RAM), but I shut off all energy saver functions, so nothing goes to sleep, and that didn't solve the problem. I also noticed that when I first hit the Burn botton in the iDVD screen, it begins to work successfully, with the progress bar beginning to show progress, and the time to complete ticks off a minute or so, and when the asset encoding phase begins, the computer's fans start up and operate at full speed. But then the freeze occurs, and the progress bar stops indicating progress and the minutes to complete text remains unchanged(for hours/until i do a hard reboot) and the cursor is frozen. I think this is a software issue, possibly an infinite loop, since the fans continue at full blast while the program freezes, which I'm guessing i can attribute to intense processing.
Okay, I got iDVD to work again, encoded and burnt a DVD successfully. First of all, this is what i did to fix it. I searched the apple support forums and tech pages - didn't find anything that specifically pertains to this problem- but i did get the idea that certain combinations of installer versions can cause irregular behavior. So I got out the original cd that came with my mac(Mac OS X version 10.2.7{G5}), and ran the software restore program, selecting only the iDVD application- which took me through the install procedure for iDVD. (I did not remove the updated version of iDVD that was already in the applications folder on my hard drive) The installer ran fine. Next I looked to see if i now had two installations of iDVDresiding side by side, and found only iDVD version 3.0.1, so i started up the program and imported 56 minutes of video and hit the Burn button, and everything went smoothly thru all 4 stages of the procedure- and the DVD works fine.
I think that the problem that i was experiencing may have been caused by the fact that I had loaded OS X Panther on a completely empty/formatted hard drive, and it did not load iDVD for me, so I loaded iDVD from the iLife software suite, instead of from the original System Software Restore CD, and this was the source of incompatibility- although i don't know why it wouldn't be compatible.
I hope this is story is helpful to somebody else out there.