MiniDV camcorder iMovie Apple TV

Question

I am using SD MiniDV camcorder (pal). I import and edit the clips in iMovie and then share the project to iTunes (ATV - large). Then I use ATV to watch it. I am somewhat disappointed about the picture quality in ATV. Some examples:
1) Play the clip straight from camera (plugging it to tv). Picture is good as expected.
2) Convert the (un-edited) dv-file to h.264 ((960 * 540, 4 mbps limit) using mpegstreamclip, then import it to iTunes. Using ATV to play it, picture is not so good as in example 1 but acceptable.
3) The easiest method: Share the project to iTunes (large) in iMovie. Picture is worse than in example 2 and there is quite a big difference comparing ex. 1 and ex. 3. It is difficult to describe it but the contrast looks worse and the picture looks like I am watching it through some misty glasses.
Now, I could convert the dv-files to AIC-format and de-interlace them (using mpegstreamclip) before importing them into iMovie. Perhaps the outcome from iMovie would then be better. But is there another way so I would not have to re-create my projects (editing and all..) in iMovie all over again?

Answer 1

No, that makes it even worse. Actually the medium choice is 640 * 360, since my source is 16:9. And my sorce is 720 * 576 (flagged 16:9).
I would think 1024 * 576 would be ideal in my case. But I really did not see any difference between 960 * 540 and 1024 * 576 (using mpegstreamclip to convert the dv-avi to h.264). They both looked ok although not as good as the original.