Thanks Tony for the suggestions. When I get time to work on this project again I'll try a higher bitrate for sure. I have experimented with higher bitrates for both formats though- up to 25, and of course the video looked great. Have not tried upper field first yet. Unfortunately I get the same error whenr I use a timeline exported from PPRO via Media Encoder (then imported into Encore as a timeline), or when I "export to Encore". All efforts yield that same error.
I will give Adobe tech support another try after i export an upper field first file to see if does the trick.

I was able to burn a Blu-ray disc with a new project, using the same kind of export settings we've been talking about here so there must be a corrupted file somewhere in that old project. Too bad Premiere doesn't give you a useful error message. What a huge waste of time.