IMovie picture quality

Hi,
I am using iMovie to make video-clips of footage that I have made from our baby-daughter.
I am not that happy with the quality of my videos and I am uncertain if this is the camera or iMovie
I have a Sony avcHD video-camera (HDR-CX130) and all files are imported directly into iMovie. This works as a blast.
Still, when a project is finalized and 'optimized' the inhouse filmed footage quality looks very poor.
The files that are imported into iMovie are enormous in file-size (why is that, actually?) so I am wondering why the output looks the way it does, somewhat pixelated (is that a word).
Anyway I might be doing something wrong. See below link to one of my projects. This film begins with foto's but at 1.20 i have filmed inside during the day, the whole image seems to be somewhat blurry. This is youtube in 480p but even when I export in quicktime in highes solution possible it doesn't get that much better.
http://www.youtube.com/watch?v=PfxZufYswqw
Your help is appreciated.

Are your iMovie preferences to show the movie at full screen when you go to full screen (meaning it will blow up smaller videos to fit the screen) or have you selected to show the movie at actual size when you go to full screen in cases where the movie is smaller than the full screen?
In other words, if your movie is, for example, 640x480. With the full screen option your 640x480 movie will be blown up to fill the screen (and look like crud). With the other option the movie will only show at 640x480 and not be enlarged.
Many HD formats are LARGER than your screen, but a few of the "mini-HD" formats (e.g. 720p which is 1280x720) the video might be smaller than your full screen resolution, so that preference decides if you want to enlarge it further to fill the screen or if when you go to full screen mode the video is made no larger than actual size.
Patrick

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    As I say it is  a personal thing.
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    Basically in early Laptops of the MacBook Pro and MacBook range the cable did tend to fray at the point where it passed through the hinge.  It did take a well used laptop that had the lid open and closed frequently to cause this.  (your 2009 model might just be in that group - I have no firm dates or models I am afraid)
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    This On Line Self fix site has pages about some models  (The one I have linked to may not be yours)
    I have linked in to later pictures in the sequence but there are navigation points to work back to the start.
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    Doing this would certail Void any Warranty you have left.
    From Posts mainly in the iChat and the iSight areas I have gathered that it seems common for Apple to replace the Screen as a whole rather than fiddle with getting solely at the camera.
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    I can say that when people post about problems with repairs a certain stores someone else will tend to post that their experience was different.
    You seem to report two different experiences with the two computers yourself.
    10:24 PM      Thursday; July 14, 2011
    Please, if posting Logs, do not post any Log info after the line "Binary Images for iChat"
     G4/1GhzDual MDD (Leopard 10.5.8)
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     Mac OS X (10.6.7),
    "Limit the Logs to the Bits above Binary Images."  No, Seriously

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