Ok. I think that fixed it. I unmerged cdrtools, and emerged dvdrtools. Now the mkisofs accepts the -dvd-video option (which is what was causing k3b to complain earlier). The new version of dvdrtools does not support ATAPI, so if you plan on burning cd's using that you either need a SCSI drive or enable SCSI emulation in your kernel.
I recomend burning DVD's with growisofs, and CD's with cdrecord from cdrtools. To use growisofs, you need mkisofs from dvdrtools. That means you need to compile dvdrtools locally, then generate DVD images using
/usr/loca/bin/mkisofs -o image.iso -dvd-video ... . Finally burn using
growisofs -Z /dev/dvd=image.iso.
I'm sure it is possible k3b to use the above commands for burning, but I've never used k3b so don't know how. I only burn from command line

. If you can't figure out the k3b settings, then either enable SCSI emulation in your kernel, and use dvdrtools. Or burn from command line
GI