How do I use my Ulead Workshop after encoding using TMPGEnc?

[capitola]

Here is my work flow:

1) Ulead VideoStudio 7.0 to produce AVI file from DV video tape
2) TMPGEnc to encode AVI file to M2V (video) and MP2 (audio)
3) Ulead DVD Workshop 2.0 to create DVD

First of all, is this the best way to convert a DV video tape to create a high quality NSTC dvd? The problem is in step 3 where DVD Workshop doesn't take MP2 audio files. I could always create one single Mpeg file in step 2 to allow DVD Workshop to read in, but the quality may not be as good as the audio is not compressed leaving less room for the video. Should I add step 2b to convert MP2 to MP3 (or AC3)? Thanks in advance!