IMovie import looks compressed from DV?

I'm trying to import video from my Sony DCR-VX2000 DV camera. It will be projected on a large screen at 1024x768 resolution. When I hook the camera up to the projector with old school RCA Component Cables (Remember the Red White & Yellow ones?) it looks totally acceptable. Then, I import it into iMovie, do some very simple editing, and export with a bunch of different export compression settings, trying to find the highest definition export I can get with iMovie.
Result: Grainy video.
So, I went back to iMovie and viewed my project pre-export straight from iMovie in full screen and I see the same graininess. Hence, I conclude that iMovie is compressing the video feed upon import.
Then, I look all through every iMovie preference and option I can find to try to find something that deals with import compression or quality when importing from camera, and I can find nothing.
Is there a way to get a better quality import from iMovie?
Is there another program that will do a better job at importing the footage over firewire?
I have noticed that there is an option to import files at full 1080i... but that's only from files... not from the camera.
HELP!

What are your export settings? What dimensions?
Your file comes in at 720X480 so the largest export dimension would be 640X480 (in QuickTime format).

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