I have DVD player Pioneer DV-343 and TV Thomson 21CX (21 inch) with S video interconection. I try 2 ways for making Video CD from photo (digital camera and scanned). Nero with use CD-i application, VCDEasy making still image. Both method not satisfied me. Both used interlace scanning. After some trial and error i find that my player+TV support only 704x480 resolution at 23.976 fps and progressive scan (NTSC Film). Other resolution 704x480 at 29.997 and 704x576 at 25 work interlace.
i use for encoding both TMPGEnc and CCE. I use MPEG-2, 704x480, 23.976 fps, Automatic VBR Quality 100 for TMPGEnc and Q.factor=1 for CCE, bitrate min=0, max=2556. I use default Quantization matrix. For CCE Quality setting Image Quality Priority =0. Both encoder give good result but CCE litle better (more details).
I use resize in other programm (not TMPGEnc). I use resize with over scan (ad border 16 pixel from all sides). I use avisynth and Imasequence pluggin

#Script
time=15
frame=24*time
Width=704
Height=480
videoa=BlankClip(frame-1,Width,Height,"RGB24",24).KillAudio()
LoadPlugin("ImageSequence.dll")
video=ImageSequence("IMG_0220_r.bmp",1,1,24)
video=video+videoa
FreezeFrame(video,0,frame-1,0)
ConvertToYUY2()
AssumeFPS(23.976)
#IMG_0220_r.bmp resized image 704x480

Burn use Nero as non standardt VCD
I agree this method not easy, but if quality first of all try it.

With kind regards Yury.