If you feel comfortable with doing an experiment - create text at 1024x768 and 720x480- and see if you can see any difference:

you can create a still at any resolution you want preferably equal to or greater than the final intended output.

1024x768 is fine for text or you can do it at the output resolution.
it doesnt matter very much in the end.

as almost all graphics programs do their own anti-aliasing of the edges of text which looks great at any resolution.

it can be easier for editing programs if you do it at 720x480 - if your final output is a standard defintion movie.

video does not have a dpi. unlike print.
the output resolution is a fixed number of pixels depending on the output device.

if you want some technical background.
the idea you are looking for is called downsampling.
do a google search for 'image downsampling'

http://www.lassekolb.info/gim35_downsampling.htm

this is quite a comic thread on this issue around the mars images:
http://www.markcarey.com/mars/discus...his-image.html