You can't burn DVD's in mode 2--that is for CD's only. Whoever told you that probably didn't catch that you were burning to DVD. CD's should be in mode 2, that is correct. But DVD's are always in mode 1. Your problem more likely lies in your boot method. If you are booting from a CD, The PS2 will be trying to load the movie from a CD also. Ideally, you should use CD/DVDGen to create your ISO with the media player in the front LBA's and burn it on the DVD with your movies. Then you can run it all from your chip's DVD boot method. Once the player loads from the DVD, you should be able to swap in additional DVD's with other movie files at will, or you could just put the media player at the front of each additional DVD to simplify the loading.
If it ain't broke don't try to fix it! But, hell if you can tweak that bastard just a little bit more....hehehe.