For the LOST season, I doubt they are on single layer. Single sided, yes - single layer, probably not - even so they are heavily compressing the video - they are probably also using a professional service that can tweak the compression in such a way to get the best quality out of each frame with the most compression. Basically doing a job that you or I could probably never do
I think your iMac has a mini displayport - if you have an HD TV, you might be able to get a mini displayport -> HDMI cable or at least you can get a mini displayport -> DVI then a DVI -> HDMI cable (unless of course if your tv has a dvi or vga input you can just get the appropriate adapter and plug it straight in.) Or you can do what I did, buy a mac mini and turn it into your HT pc, or you can get an Apple TV unit and make your videos into mp4s, get them into ITunes and sync them to the appletv unit, or you can get a WD HT unit (can't remember the name) and put the videos onto a thumb drive and plug the thumb drive into the WD and play the videos....
In terms of getting it encoded differently - the only option I can think of for Mac, which is unfortunately not free, is ffmpegx - but you can try it out to see if it will work for you (I've used it a few times, takes a bit to get used to the settings). Another option (not free again unfortunately) is moviegate. My favorite converters (mpegstreamclip and handbrake) won't do mpeg2 (dvd video).
Another option:
If you have bootcamp setup, or a vm setup with windows, you can try MediaCoder (mediacoderhq.com) - it is free, and supports outputting to dvd. You can try to run it under darwine but I don't know how well it will work. It's another fairly comprehensive converter, a little complicated - but also really only for windows - although evidently some success has been found using windows emulators like Darwine.