How to maintain video quality after resizing?

I have a 640 x 360 px video that I want to resize to fit a 480 x 270 px flash movie. When I resize the video to fit the smaller stage the image quality suffers, it looks like low res. When I crop to fit, it looks fine. Is there a way to maintain image quality when reducing size?
link to file: http://www.moongraf.com/flashvideo.html

I have nothing on this computer aside from Adobe and a few other audio apps. This is a dual Xeon 6GB system. I work in IT and am MS certified. I do not think it is the system. I am using AE CS6. =A0Keyboard is set to its defaults. I do not touch the keyboard mappings. The effect brings the clip down to 10% or so. How should it be resized? SHift - click and drag works in all of my apps like Photoshop, so it isnt the kb or the system. Is that the way it is supposed to be done in AE? If you have AE, are you able to try this to see what I mean?

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