Hmm, interesting, when you select DV or DV Widescreen, it's NTSC and no where to change it to PAL. If you select MPEG4, there's no where to select or see what format there is. There is that option somewhere, I have seen and used it. Maybe IDVD when you import to that?
iMovie 5.0.2, can't remember doing the update, but gee the responsive time was slow, click on the menu and the ball would spin for a minute, never had that problem before. Maybe the update forgot about the Country formats?