I dont know about Premiere Elements 7, but until very recently I was using Premiere Element ver 3. Version 3 worked just fine for me for editing and burning standard definition video. Making DVD menus, was a bit limited, but acceptable for "home"use.
However, I have recently switched to shooting all source video in 1440x1080 HDV and although I found that Premiere ver. 3 was able to edit these M2T files the ability to down convert and create a standard resolution file for DVD production was not up to my expectations. Whenever I exported a standard DVD resolution file from the edited HDV source material, the DVD version was "soft" and lacking sharpness, no matter how much I tried to override any settings. Hopefully the compression programs have improved in Premiere Elements with the newer versions but I have no expereince there.
I found the quality of the compression programs in both the Edius program, and also Sony Vegas, to be of much better quality, and ended up switching to Vegas. After a month of using Vegas I am very pleased. Its much more feature rich than the Elements version I used, a much better DVD Authoring program is included too. But these choices are a bit more expensive, so I think it is like many things in life: you get what you pay for.
I have not tried any Blu-Ray production to date. That requires me to buy a new TV, Bluray Player.. a Bluray burner..that will be the 2009 project.