I was told that it is okay to edit in a 24.976 timeline if you set the pulldown correctly in the "Film and 24P" settings.

I don't want to throw a wrench in your process now but I have never run my videos through compressor before DVDSP.  My workflow has always been export QT Reference or QT Movie-desktop-DVDSP and all videos have played fine.  To me your workflow sounds like you are compressing the video twice, once through compressor and then DVDSP also compresses it. 

Either way gets the exact same result, an mpeg2 and AC3 (or aiff) file.  Compressor is just a really nice interface to do things that can be done in quicktime, but set it up as a batch, multiple settings per movie, etc.  Put a QT movie in, get an mpeg2 out.  DVDSP just takes the compressor step out of the process.  Drop a QT movie into the track frame, get an mpeg2 after the encoding.  DVDsp then muxes it when building the ts folders.  If you drop an mpeg2 made from compressor into DVDSP, it does not encode it again, since it is already in the format that it wants.

I have burned to DVD in all these ways multiple times and have found that the best process is exporting totally uncompressed from Avid and letting Compressor take care of it with their default presets. You don't have to worry about any operator errors or anything, it just does everything for you.

As for my initial problem, it was fixed by a key developer of Avid software. He walked me through it in approximately 5 minutes.. Genius! I had one TEENSY setting incorrect. I had to change this setting and then recapture everything correctly. It had to do with the "PULLIN" being set to "A". I now know that I would NEVER have been able to find out what was causing this problem had I not talked to him. Thanks Michael!!

"But, if you shoot on 24p MiniDV (ie, fake 24), then you're really shooting at 30i and should capture/edit as such."

This is certainly NOT true. 24p cameras do capture at 24 (23.97) and introduce a 2:3 pulldown. Choosing a 23.97 ntsc project removes this pulldown. The resultant media is true (24)23.97 psf. The only time there is a problem is if the cadence ws not detected correctly or if perhaps someone shot in 24p advanced mode etc.

The other issue to be aware of is that 24p media on a 30i dvd looks bad on progressive displays which is almost everything these days.

You are 100% correct. We shot 24P with a Panasonic DVX-100 and created the project at 23.976. The only reason the footage looked crappy was because I captured at the incorrect cadence. True true true.