Normally I wouldn't think a Pro piece of equipment would bother with playback of D-Theater since that's a consumer format for playing back pre-recorded movies.
But apparently according to this brochure, it does play back D-Theater.
http://pro.jvc.com/pro/attributes/HDTV/brochure/DVHS400.pdfAs far as your question about mastering goes, I can't say for certain, but there were higher spec HD source tapes at the time like Panasonic D-5 they might have used to make masters for D-Theater. Then again, with it being digital, keeping the masters on a hard drive might have started being used at the time.
And with a lot of distributors in the early 00s using HD masters for their DVDs, using the same master for D-Theater was a no brainer.
Now as to what machine they would use to record these tapes and make duplications? That I can't say. I know Bell and Howell were big into VHS tape duplicators for movie distributors in the 80s, but I wouldn't be able to name single model number of any of those Bell and Howell machines nor be able to tell you what one looked like. I can only imagine a similar machine was made for D-VHS/D-Theater duplication.