Why is the video quality so fuzzy?

I’ve got a Flip Ultra HD that we’re using to make simple business-related videos to upload to YouTube. If I'm able to upload directly from the Flip software without needing to edit the video, it looks great, crisp and clear. But we wanted to make something a little more complex that needed just a few edits. I got it all put together and then looked at my file/export options. I selected web streaming and it compressed it. I uploaded and viewed it and it looks like crap. So I exported again, using the CD-ROM setting, and it still looks fuzzy.
Am I doing something wrong? When I view the source files before importing them from the Flip camera into iMovie, they look great. Total size is about 320 meg. Then I'm cutting about a third of the video out from them which should reduce it further. But if I want to export with ‘full quality’ from iMovie, it’s going to create a 700 MB file. I can’t upload that to YT.
If I were to upload these directly (without the needed edits), it would look great and be much smaller than what iMovie wants to upload.
FYI, I'm doing this in iMovie 6 but just got iLife 09 to install. I’m wondering if I'll get any better results with iMovie 9.
Any help would be appreciated.
Message was edited by: Conejo

try this:
Export with QT/Expert settings.. hit the blue button..
next menu: choose 'Quicktime' again, click Options
choose 'Compression', choose h264 (=very efficient codec)
if your project is very 'huge', reduce the framerate to 15fps (=drops files size by half)
if your happy with YT 'standard res', reduce resolution to 320x240 ... (=reduces file size again by 3/4)
if you're a few bits over the limit: reduce audio sampling to 22kHz/mono
this should shrink your files to YT limits ..

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