PAL VHS uses 702 pixels of the available frame size, DV might use all 720 pixels, but to maintain the correct 4:3 aspect ratio of the source the frame size should remain as 720x576 ?
No. Pal VHS captured frame is 720x576, but the active area is 702/704x576. The 4:3 aspect ratio refers to this last
(search the latreche34 experiment on display a circle here or in videohelp forum).
Then you crop the original frame to 704x576 and encode with a 4:3 DAR. If you rebuild the 720x576 there is a small error. You can choose this last if you do not mind