The "Pulldown while playback" option with encoding set to 23,97fps first lets your authoring appl. accept the 23,97 stream for building a SVCD or DVD compatible Disk. Second, ... the "Pulldown while play" gives the DVD Player an information to do the pulldown to 29,97 internally of the Player on the fly.
By doing this the result is that the player finally offers 29,97 interlaced stream to a NTSC TV. But if you set your Players output a PAL signal, he just converts this 29,97 stream again to an interlaced 25 FPS signal which will be accepted by your PAL Tv. Thats why most PAL DVD Players can play back NTSC DVDs
DVD Player are little technical heroes.
So in your case to safe Pixel amount by choosing to convert a PAL 25fps to for example 480x480 23,97 to encode with Pulldown while play, ... the best way is to do it using Avisynths AssumeFPS() Command.
For your PAL movie add the following lines at the end of your script generated by moviestacker using resizing to NTSC 480x480 when your source is for example a 720x576 .d2v file:
AssumeFPS(23.976, true)
Now you can onvert your avs File using 23,97- pulldown while play in TmpegEnc.
But you also have to convert the audio afterwards using Besweets NTSC/PAL audio presets so choose (25.000 to 23.976) this will give you a well audio synced stream.
Ill at Work so I hope I explained this correctly
Ive done this a lot of times when I wanted to fit an ex-PAL for example 140min Movie to one CD