.AVI conversion for highest quality in FCP?

I recorded video on a Panasonic AVCHD. My client needed the final video in 4:3 at H.264. I recorded video on a Panasonic AVCHD as DV 480/60i. Which is turning out to be a huge mistake. Since I couldn't log and transfer the DV files, I moved the entire file folder from the SD card on my hard drive. I'm previewing the .avi files and the quality it looks terrible. I realize I didn't record in HD, but the quality should still be clear. I'm hoping this is just the preview? What is the best way to deal with these files to get them into FCP? I've tried Compressor and the quality is still low. Help please? I am desperate for an answer (and praying for one I'll like).

Oh ho ho ho!  Do I have a treat for YOU!  This is EASY PEASY!  And will take no time at all.  And the quality will be UNTOUCHED.
Ready?  OK...
Use MPEG STREAMCLIP...drop a clip into the drop zone, then hit SAVE AS...and where it says AVI, click on that and choose MOV.  BAM!  Done in under a second.  And then you have a DV/NTSC MOV file that FCP works with natively...no fuss, no muss. 
FCP just doesn't like the AVI extension.  And that is all you are doing, changing the "container type" of the footage.  No conversion, no recompression. 

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