AIC 1280 X 720 to MPEG-2 Looks like crud using imovie | buy compressor?

Question

Repost from "compressor" group.
http://discussions.apple.com/thread.jspa?threadID=2075563&tstart=0
I am a complete newbie to the video editing and compression world. Please forgive me and thank you in advance for your advice.
Here is the low down. I am using Final Cut express. I edited a 4 hours training video with screenshots and some screen capture. This is training video on how to use some technical database software so the screen captures are movies of my computer screen captured with iShowU. My FCE sequence and screen capture video was recorded using Apple Intermediate Codec 1280 x 720. When I try to use imovie to burn the footage to a DVD everything looks very grainy. It looks like crud. When I export to Quicktime in the AIC format looks great.
Since I am a newbie, I know I probably should have recorded my screen captures in another codec and not 1280 x 720. Hindsight is 20/20.
I have noticed when I export from Final Cut Express to H.264 it even starts too look grainy. I really need to actually get in on several DVDs in the MPEG-2 format.
So my questions for you is:
Do you think this is something that Compressor will handle? Can I take 1280X720 AIC and use compressor to encode to MPEG-2 and not get grainy resolution? I think compressor can crop instead of scale which I think is what iMovie is doing when it encodes from AIC to MPEG-2. I was using the iMove professional encoding and even tested it with a 30 second clip and it looks like crud. I know compressor offers more fined grained control. I think the grainy MPEG-2 results are from iMovie trying to scale from 1280x720 to 720x480. (I think)
Or should I go back and create a new sequence and re-record all my screen captures in a better resolution that is DVD/MPEG-2 compatible.
I am not sure if this is a screw up in my choice of capture resolution or if it is a limitation of imovie. I am just hesitant to drop the coin on FCP if this is not going to work. Thanks again

Answer 1

No, I don't think Compressor can handle it. MPEG-2 is too heavily compressed to handle compressing screen captures. It's always going to look awful. The limitation is in the DVD format and MPEG-2. Most training DVDs for software are not made using MPEG-2, but using computer formats with a runtime player for playback on a computer monitor not a TV set.