Here were a lot to sort out:

The dvd-wide-ffmpeg+mpeg2enc.m2v from here is also scaled or streched too high in vertical direction.

VLC deinterlaced on playback  (keyboard D) on interlaced m2v gives better quality.

In comparision the ffmpeg command line I have used is:
ffmpeg  -i dv01.dv -f dvd -target pal-dvd -aspect 16:9 -vb 8000k -mbd rd -trellis 1 -cmp 0 -subcmp 2 -vf crop=iw-0-0:ih-106-65:0:
which results in progressive and DAR 16:9, but still not so good edge quality

May be "progressive" here is error, and ffmpeg still encodes interlaced-as-progressive, so VLC for example does not enable deinterlacer at playback automatically?

VLC Deinterlaced ON playback of Progressive  dvd-wide-dv01.mpg results in more coarced jagged or saw-toothed round edges

Have you tried to add interlaced flags manually to ffmpeg's command line?

-flags +ilme+ildct  gives interlaced bff