Help! Mpeg-4 export results in pixelated movie

A friend of mines is a student film maker. He's using a Mac mini and iMovie 4. He has to post a movie on google video and google wants it in Mpeg4 and not as a .mov file, so he exported his movie project in iMovie 4 expert settings as a mpeg4 file. The resulting movie was extremely pixelated.
So what can he do to make his movie have better video quality and less pixelated like it's original form but in mpeg 4 format so he can re-submit it to google video?
MDD PowerMac G4 Dual 867Mhz   Mac OS X (10.4.3)   1GB Ram, 128MB Radeon 9800 Pro

Hi MacGallant,
in addition what Lennart said:
720x640 pixel with 8bit color info (here&then...), 30 pics per second....THAT is an amount of data....
to make video files smaller:
* reduce frames per second - 15fps is enough for webusage... (=>reducing half), depending on what you show... 12fps?
* reduce size - making video dramatically smaller, but... really smaller => no more "fullscreen" playback... or, you blow up the small screen with your player => blocky artifacts.... I estimate the video.google screen as 320pics wide.... (reducing file size by 75%)
* reduce audio - many spend not too much brain on that point, full HiFi stereo etc... mono, 22KHz, 11KHz.. do you really need audio on that web video??
* reduce bitrate - in the export options of QTpro/mpeg4 compressor, under "video" you'll find a slider....playaround with that... ok, going under some bitrates, it get's really ugly... you have to try, because bitrate/quality depends much on content of the video....
but, hey, a student has much time to spend................... ;-))))

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