IMovie muddies perfectly crisp pngs

Hi,
Admittedly spiral-eyed now, I have read everything that I can google, etc, re: iMovie lowering image quality, but can't find anything specific to this problem:
I am creating a 47-second movie for iOS applications. I have an iMovie 9.0.4 project that includes perfectly crisp 480x320 pngs saved from an image created in Photoshop -- 8 pngs displayed sequentially w/cross dissolves between to illustrate the 47-second aiff.
Does anyone know why iMovie would turn perfectly crisp 480x320 pngs into muddy video images? And, more importantly, how this can be fixed? Numerous blogs mention poor quality stills being, but I've found no viable solutions.
After a series of exports to .mov and .m4v, the best visual is a .mov with movie inspector settings:
H.264, 480x320, Millions Linear PCM, 24 fps, data rate 1726.03
I've done Flash apps with clean app visuals from similar source images/media. New to iOS and iMovie, not sure where the 'mud' is coming from. Seems like it should be pretty simple (ha). Any help that you can give will be greatly appreciated. Thank you.
Message was edited by: _LB

Ended up using 2048x1536 pngs in iMovie. Exported using QuickTime and compressed to 1024x768. Looks great.

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IMovie muddies perfectly crisp pngs

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