Significant loss of picture quality in iMovie, what are my other options???

Hello All,
I am new to the Mac world moving over from windows.
Hooking up my dv camcorder (non high-def) to my TV gives a pretty good picture.
If I use iMovie to import from my camcorder and then iDvd to burn a dvd and play the DVD the picture quality is significantly reduced (looks worse than VHS!).
I am reading that this is uncorrectable through any settings available in iMovie or iDVD. This to me is unfathomable!
Being a newbie in the Mac world I don't know what my other options are.
I read about iMovie HD and Final Cut Express but don't know how they position and can I achieve better picture quality preservation.
I want my camcorder picture quality better preserved. I’ve certainly gotten much better results on windows with various packages (but have little experience).
I came into the Mac world believing that this sort of thing is what Mac was great for so a bit surprised.
How do you folks get around such a significant picture quality loss???
My home movies through iMovie and iDVD look embarassing for circa 2009!

I convert my imported dv files to AIC at 1080p before editing.
There is a small quality drop using this approach, I find it acceptable but some others don't.
I have added an original dv movie clip, two exports in different formats of the same clip as prepared in imovie 09 and another of the same clip exported to back to dv as prepared in imovie 6, to a disc image of a DVD created in iDVD.
I don't feel the differences represent the differences some here are reporting they see themselves, see what you think
Source Comparisons (580 MB)

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