Very poor video quality after transcoding in Adobe Encore CS5.1

I have very poor video quality after transcoding the video file (MPEG) in  Adobe Encore CS5.1. Below you see my used settings in my filmproject.
The problem exists after transcoding in Adobe Encore CS5.1. I checked all steps and found out that there is no problem until transcoding. My exported file  in MPEG has very good video and audio quality.
1. Camcorder: Panasonic AG-AC160AEJ
Operating System : Windows 7, 64 Bit, Ultimate edition
Source files: MTS files
Recording settings (clip settings):
Type: MPEG Movie
Image Size: 1920 x 1080
Frame Rate: 25,00
Source Audio Format: 48000 Hz - compressed - Stereo
Project Audio Format: 48000 Hz - 32 bit floating point - Stereo
Pixel Aspect Ratio: 1,0
2. Sequence settings in Premiere Pro
Sequence was created from Clip directly with settings above.
3. Exporting settings in Adobe Premiere Pro:
Match sequence settings was activated. Now other changes were set.
4. Exported File:
Image Size: 1920 x 1080
Data Transfer Rate: 25920 kBit / s
Frame rate: 25
Bit rate: 384 kBit / s
Channels: 2 (stereo)
Frequence: 48 kHz
5. Transcoding settings in Adobe Encore:
I used different transcoding settings such as automatic DVD Transcoding, CBR and VBR.I also set “use maximum render quality”. But all results were always the same: very poor quality.
Why does the encore transcoding cause such bad video quality?
How can I solve this problem?
Please help me soon.
Best regards.

Hi Ann,
1) I did not only „Automatic (based on source)“ options in my tests, but also many other customized options.
The results are very poor. I have done a new test with the following settings. The result is also poor:
Download link:
Export Settings:
Format: MPEG2-DVD
Preset: Custom
Codec: MainConcept MPEG Video, Quality: 5
Frame Rate: 25 fps
Field Order: Upper
Pixel Aspect Ratio: Automatic (based on source)
Render at Maximum Rate: [active]
Bitrate Encoding: VBR, 2 pass
Minimum Bitrate (Mbps): 5
Target Bitrate (Mbps): 9
Maximum Bitrate (Mbps): 9
GOP Settings
M Frames: 4
N Frames: 12
Use Maximum Render Quality: [active]
Multiplexer: None
2) Why shouldn’t I use the “Match Sequence Settings” in exporting? Because of the big output file size?
I used it and the results are very good as I expected:
Download link:
Export Settings
Match Sequence Settings [selected]
1920 x 1080, 25 fps, Upper, Quality 50
User Maximum Render Quality: [active]
3) I tried also Dynamic Link in PremierePro (to Encore).
The results are also poor.
4) I will test also LagarithLoslessCodec and frameserving +DGMPGDec. But the video is vertical long drawn-ot.
I think I did not use it correctly. 

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