Cropping quality loss in compressor

Im trying to crop to TV safe to save size and quality.
But when I do the quality goes down and the image gets more pixelie. It is like instead of chopping off the sides and using the data to make the rest of the image better, it is just blowing it up and stretching the pixels to fill in the gap...
Is there a button I need to turn on or something to set the work flow priority or something so it still looks crisp?
I heard that Compressor 2.0 is unstable and they fixed them with 2.2 upgrade where they fixed issues. Is this true and part of my problem?
Also, a 320X240 400kbs clip looks better than a 480X360 800kbs clip. What up with dat?
G5 2.5 duel Mac OS X (10.3.9) Compressor 2.0.1
G4 APG, G5 2.5 duel   Mac OS X (10.3.7)  

Sorry, I've got 23.98 material floating in my head and should have mentioned that, if you're like most folks and working with interlaced 29.97 footage, you'll want to set Output Fields to Progressive and adjust the Deinterlace setting to Better.
As for Retiming, unless you're altering the frame rate to some odd number, you shouldn't need to mess with the default setting. What that means is if your exported frame rate is always recommended to be a number that's your frame rate divided by ~2 or ~4 (ie. 30 fps -> 15 or 8 fps). On other words, if, for whatever reason, you need to go from 30 to, say, 25 fps, then set Retime to Better, otherwise, leave it be.
Compressor's Frame Controls produce the best deinterlacing (and resizing) that I've seen via software, however the time added to the encode is not modest. Please do a short test clip (no more than 30 seconds) and see how you like the quality/time trade-off.
As for retiming, I would not recommend using it because it simply adds too much encoding time to a clip that needs to be resized and deintelaced. Think of it as the straw that breaks the camel's back.

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