IMac 24" video quality issue (streaming and non)

I have searched the forums extensively and not found anything that quite matches the issue I'm currently having. If you know there's a previous thread with a solution please direct me there.
This issue first popped up when I tried to watch the season finale of 30 Rock on Hulu: the focal points of the scene weren't as sharp, everything in the background seemed seemed to pixelate intermittently and if there was any kind of motion, there was pixelation around that. I chalked it up to Hulu's new player, especially since anything else I watched on Hulu had all the same attributes.
Then, after taking a break from not using my Netflix, I noticed that anything I streamed on there did the same things. I checked my ISP download speed and it was 20mbps (way above the suggested amount for DVD-quality picture). It also seemed fishy that when streaming Netflix through my Xbox 360 (and the same router), everything looked beyond crisp.
The final straw came playing DVDs. I noticed some of that same degredation around motion that plagued the other two examples, although on a much smaller scale (my assumption being that the quality starts out much hire from a DVD source than streaming).
Has any one ever had this issue? The machine is not even 2 years old yet (Purchased March 2008).
Thanks in advance for any and all responses,
Leo

The general question of whether to use interlaced footage is a topic for another forum (e.g. the Video Lounge) but one thing to bear in mind when embedding video into PDFs is that it won't usually play at 1:1 pixel scale. Resampling will occur, and that can introduce visual effects.
You have two options to make the video play at '100% size' - either set the Rich Media Annotation to play in a floating window and define it to match the footage dimensions, or use a custom version of the videoPlayer widget that turns off scaling.

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