Low quality importing DV to iMovie 'o8

I'm a Mac and iMovie '08 newbie, so apologies if this has been covered, but I haven't found answer to this problem.
When I download DV video (via FireWire) into iMovie'08, the quality of the video is much worse than when I view my video on a TV directly from camcorder. The poor video quality exists whether I view Project or Entry clips within iMovie, or watch exported projects (large format) in QuickTime or iDVD.
I have a fairly old, standard mini DV camcorder (Panasonic GS9 - 680,000 pixels; 680x480 stills) and a new iMac with Intel Core 2 Duo 2.4GHz running Leopard.
Despite the deficiencies of iMovie '08 relative to '06, my understanding from the other threads is that both versions of iMovie should import DV video at full resolution - is that right?
Have I got an incorrect setting or am I doing something else wrong? Help very much appreciated. Thanks.

Is this quality loss pre or post processing. To examine files pre-processing open the imported files (home/movies/imovie events, by default) in QT. (ensure high quality playback is selected in the QT prefs)

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