Importing MPG quality compromised

I'm having trouble getting my moview to play back smooth and
un pixelated. The MPG plays OK when I run it outside of flash, but
when I import it and test the movie it's quality is less than the
original. I am selecting the embed video option when importing and
selecting the compression to 56 kbps modem to cater for the viewers
with slow downloads. Any suggestions? An example of what I am
talking about is in this link.
null
Movie.
Cheers,
Maurice

Do you have the original files still on the PC?
A DVD is highly compressed, so you have lost quality. But if you must:
http://danslagle.com/mac/iMovie/tips_tricks/6010.shtml

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