If you just burn data disc with your mpeg-2 files then you will get the maximum storage.
If you want to make a disc for a DVD player you need software like Nero Vision that makes menus. If you do this there will be some quality loss because the software will re-encode the vids to bitrates that you choose. The 2 hour mode is about 2 hours, but can be cut down to less the more you add. I think the menus some software creates takes up space because they are animated, and it's basically a separate mpeg-2 (.vob) file on the disc for the animations.
The general settings for most software is 2hr mode is 4Mbps, 1 hour is 8Bmps. Some have a 3.5 or something for 2.5 hours. There's noticeable quality loss if you go to 3hr or lower. I wouldn't go lower than 2.5 because then the software cuts down the resolution to 360x240 because of the lower bitrate.
I know there are DVD players that play back DivX, but I'm not sure if there are any that play raw mpeg-2 burned as data discs. Do a little searching, and I'm sure you'll find something. You might have to burn in certain disc format, but Nero Burning Rom has several options.
I've always found the easiest way to watch vids from a PC is to either play them from a laptop with a dual monitor setup or through some type of network streaming device. Even if you burn data discs, you can play the files right from the discs on a PC. XBox 360 has a built in Media Center Extender that when setup streams vids right from your computer through your home network. It's great except it only plays wmv and mpeg-2. There are other devices on the market now, and they are right around the price of a DVD player. I wish I could recommend one, but I only have the 360 which suits my needs. I can play anything on my hard drives upstairs down on the big TV in the batcave.
Also read through videohelp's pages. A lot of good info on DVD's, different formats, etc. Great for video heads.
http://www.videohelp.com/
