Final Cut Express to H.264 MP4 HI DEF Workflow - My quality is bad

Hi, all
I have some hidef footage that I am editing in FCExpress. My source is 1080p - 1920x1080 and looks great. It looks like the bitrate of my MPEG2 source is around 9MB/s.
When I export using Quicktime conversion in my final project, I tell it to use MP4, H.264, 1920x1080 at 10MB/s but my quality is markedly worse than my original footage.
The output info shows 1920x1080 but I am seeing very bad "jaggies".
What should I be looking for to correct the issue?

OK. It is certainly not my bitrate. I cranked that to 50MB/s and I still have the grain.
So maybe this is whats going on - if I selected DV in easy setup, dragged in clips without changing format and did my whole project, if I output to high resolution, I assume it is simply blowing up the DV quality.
If I indeed did this, how do I tell FCE to convert the project to HD?

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