Blocky/Pixelated dark scenes in iMovie 11

HELP!!
I ripped a DVD to my desktop at a pretty high quality using handbrake. It's a full-length movie weighing in at 3.35 GB. I then imported that movie into iMovie 11 so I could edit out some language. If I view the movie full screen from the Event Library section in iMovie 11 it looks fine. As good as the newly ripped version on my desktop. When I highlight the whole movie in the Event Library and drag it into the Project Library as a new project, it turns to garbage. Horribly pixelated dark scenes to the point that it is not even viewable. Thinking that this was just a problem with the preview window when viewed in full screen, I edited the video and burned it using iDVD. It burned just as badly as it looked in the Project Library. There must be something happening between the Event Library and the Project Library that is just killing the video quality. Any help/suggestions would be extremely appreciated.
Relatedly, is there anyway to edit a video using iTunes? It looks fine in that program.
Thanks

However, you are still not going to like the results of your ripped MPEG Streamclip DV-video when imported into iMovie 09 or 11. The quality will get degraded by nature of the latest iMovie programs.
To keep the DV (non-pixelated) quality, and to export the same, you would need to use any of the following: Final Cut Express (for a bit of the "pro-sumer"), Adobe Premier Elements 9 (consumer video editor that is a lot like iMovie 06), or get your hands on the old iMovie 06.
Again, these are what are necessary to edit your ripped DVD and keep them looking as nice as the original.

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