Or just use transcode's built-in filters to clip and resize to the correct dimensions for PAL or NTSC DVD (--export_prof dvd-pal or --export_prof dvd-ntsc, --export_fps 25 or 29.97 depending on whether you are transcoding to PAL or NTSC). This would at least start you with a pair of compliant audio/video streams that you could then tweak so that the encoding met your preferences.
You don't even have to complete the transcode operation to see if it's "OK"-- you can tell transcode to only encode a specified amount of time of the source video using the -c option (then merge the audio and video to confirm proper a/v sync in the final product), or you can just watch the .m2v file in mPlayer (specifically mPlayer; Xine doesn't seem to like to do this, but mPlayer will) while transcoding does its work. If it doesn't look right visually, you can then just Ctrl-C the transcoding, delete the incomplete audio and video files, adjust your settings and try again.
The thing is, I don't think you can get borderless conversion from transcode. Which is not the same as saying that the final product cannot be displayed on your television without borders, because it often can. However, this is not the job of transcode, but partially of dvdauthor, and partially of your DVD player. All transcode is going to do is provide a compliant video and audio stream, and if your image is not natively 720x480, 704x480, 352x480, and 352x240 (for NTSC), or 720x576, 704x576, 352x576, and 352x288 (for PAL) transcode has no choice but to put borders around that image to bring it to the proper aspect ratio for the standard. Do things any other way (stretching, zooming and the like), and you're risking losing part of the image, or worse, the dreaded "stretched heads" syndrome, which you really want to avoid (as it's quite irritating).
Furthermore, the image you see as produced by transcode is not completely 'final'. The video will be acted upon again by mplex (to multiplex the audio and video back together), but this does not usually change the video visibly. However, converting the resulting *.mpg file to *.vob files to be burned onto a DVD can, and so does actually playing the resulting DVD --the data on the DVD may be converted, stretched or zoomed by the DVD player for purposes of display, and that's before you choose "Zoom Fit" or "Wide Screen" or whatever display option your DVD player may have. I've certainly converted videos to DVDs that looked different (in terms of things like borders) between 1) playing the *.mpeg in mPlayer, 2) playing the DVD folder as a device in mPlayer, and 3) playing the DVD in my DVD player. What I mean is that it can be that a condition that looks like it might degrade the video on your computer (unreasonably huge borders in a letterboxed film, for example) does not display at all on the television-- because in this case, the DVD player has "reformatted" the display so it displays as a normal letterbox and not the weird thing you were looking at before you burned the *.vob files.
So to some extent, you may be using the wrong tool for the job (transcode doesn't so much do this), and to some extent, you may be attempting to solve a problem that is not in fact a problem (your DVD player may solve it for you).
If you really want to zoom the image so that borders are not needed in the first place, I think you might want to check out mencoder's cropping and scaling functions (or crop and scale using avidemux without changing the encoding) before worrying about transcoding to another encoding format. See 7.10.3. Cropping and Scaling
in the mPlayer docs
Hope this helps.