Initially, I wasn't sure if DRC was part of Dolby. Now I know that turning it on invokes the particular compression curve that is indicated in the metadata.
However, I have a DVD player that plays back Dolby audio but does not allow one to turn DRC on or off, and I've read that such players indeed apply the compression curve indicated in the metadata.
So, in the beginning, before I had ever seen "DRC" on a DVD player's set-up menu, I thought that perhaps the compression curve in the Dolby metadata was always applied to Dolby audio by all DVD players, and that any option on the DVD player's menu to turn something called "DRC" on or off was perhaps an option to apply compression "further downstream" to any audio on the DVD, Dolby or otherwise. That then would result in "double compression", if the audio playing back had been Dolby encoded and if the metadata's compression curve was being applied to it (before the additional "DRC" applied "further downstream"). But, as I say, I now know that DRC is not compression in addition to that resulting from the application of the compression curve in the metadata.
However, as you pointed out, some TVs allow you to turn on or off the compression of any audio, regardless of its type or origin, and so if applied to Dolby audio that has already been compressed by DRC, then the result will be "double compression", it would seem.
By the way, I've made some additional inquiries concerning film festivals, and it seems that at first, you submit a DVD for consideration. The judges then watch that and determine if your entry will "participate" in the festival. If indeed it is chosen for participation, then it will be screened, i.e. projected or shown somehow in a large room or theater for all to watch, in which case you'll be asked for your audiovisual work on HDCAM or some other high-end format.
Well, for the DVD that you submit, there seem to be no standards. I guess this is because the judges are probably going to watch on plain 'ol TVs, perhaps at home, whenever they have time, etc. and so you should simply aim for a dynamic range that seems appropriate for a TV in the living room of a house. In this case, I see no reason not to normalize the audio to full scale, as the judges can simply adjust the volume accordingly and things should be fine, provided that your dynamic range is narrow enough to allow a volume setting that is neither too loud nor too soft. Thus my figure of 45 dB, maximum, determined experimentally.
But concerning screening, there are horror stories out there of the volume being turned down too much, or the speakers sounding almost blown, or mono playback only, or so much noise among the audience as everyone keeps talking or incredibly loud hiss from noisy amplifiers that you'd better have your audio normalized and highly compressed such that everything is right near the top so that it can be heard -- especially the traditionally quiet sounds, such as the rustling of clothing. And yet on the other hand, there are also stories of how the audio reproduction at a certain festival was really good, but that unfortunately, the film maker had his audio highly compressed and so it sounded like a "squashed television program", rather than a "fine film worthy of projection in a proper cinema".
So, in short, it seems that the quality of the audio reproduction at film festivals is all over the map and that there is no way to anticipate what it will be. In fact, I contacted one such festival recently and was told, "there are no standards here... just do what you think is best and things will be fine...", which thus left me totally in the dark, at least concerning that particular film festival, its playback equipment and its practices.