Best Sequence settings for JVC Everio files (TOD format)

I own a JVC Everio camcorder, and I recorded some videos if Full HD (1920 X 1080).  I loaded the TOD files to my computer and converted them to MPEGs using the bundled PowerDirector program.  When I play these HD MPEG files in Windows Media Player, they look fantastic.  Very smooth color and no pixelation.
I loaded these files into a Premier Pro CS4 project because I need to perform some simple editing (trim in/out points, small rotation, and color correction).  I created a sequence using the AVCHD 1080p square pixel preset, which has the following settings:
AVCHD 1080p square pixel
29.97 frames/second
Square pixels
Progressive scan
30 fps Drop-Fram time code
48kHz audio
I-Frame Only MPEG
Maximum Bit Depth, Maximum Render Quality
When I play the video files using either the Source or Project Monitor, the quality of the files appears degraded compared to what I see through Windows Media Player.  I'm concerned that I'm not using the correct settings to best work with this source video format.
Should I change either the Program or Sequence settings to optimize for this file format, or is Windows Media Player performing some magic in the background?
Thanks,
Matthew
Specs:
Premier Pro CS4 4.2.1
Windows 7 Professional 64-bit
Intel Core i7 860 @ 2.67 GHz (having some overheating issues, so no overclocking)
8 GB DDR3 RAM
ATI Radeon HD 5700 Graphics Card

This ARTICLE might offer some tips on the TOD files.
Good luck,
Hunt

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