I emailed the DVD Forum regarding the claim that it is a requirement of the DVD specification that PAL DVDs have their scan mode flagged as ‘interlaced’. However the DVD Forum denies that this is in fact a requirement. Here is their reply:
DVD-Video Specifications do not require flagging for interlaced or progressive. It might be required in MPEG specifications, but it is up to software producers to choose which mode is appropriate for their product.
That makes the whole flagging thing bit of a mystery. Why would virtually all film-sourced PAL DVDs be flagged ‘interlaced’, and why would two different reputable DVD authoring houses advise me that this was a requirement? Weird. I shall investigate further.