I always allow for as much headroom as possible when it comes to wordlentgh.
In other words, raising gain on 24bit tracks and then going back to 16bit may have less impact (i.e. truncated bits) depending on the calculations used by your audio tool. Staying inside the 16bit domain throughout the process with any operation that alters your source definitely chops off things from your source. Best you'd be off with 32bit (float).
1) LIVE 2 made a great leap forward in terms of sound quality compared to 1.5. In any case worth money for an update!
2) You should avoid doing any changes to your soundtrack once it is imported to Premiere. Up to version 6.5 Premiere is notorious for its really bad and crispy impact on sound quality. Don't you even touch the mixer! From Premiere Pro on everything should be fine since it will be using CoolEdit.
2a) When doing the processing for DVD outside Premiere anyway, maybe you shpouldn't even let it look at your soundtrack in the first place