A DVD will hold 120 min. of footage only if that 120 min. of footage is compressed to 4.3 GB or less of data. iMovie has a long list of compression formats/codecs via the File>Export menu. I am not well versed on all the differences between the codecs but:
should give you some idea of what you want. I know the "Full DV" setting is a full quality export with no compression and iDVD has compressed my Full DV work in the past when I've gone to burn a DVD (at least I think it has...) Anyway, keep at it and good luck!