Newbie question about video quality in CS3

I'm new to Premiere CS3. I've been using iMovie but wanted to move up to an app with more features and finer grained tuning. However, I'm having trouble getting my imported clips to maintain their quality. Don't know if I've got PrCS3 set up incorrectly or if I don't know enough about video formats.
I'm running Premiere v3.2.0 (374) on a MacBook Pro, 2.16GHz Intel Core 2 Duo, 3GB memory, OSX 10.6.6
Here's my scenario:
I have a video clip with the following specs: .mov, 720 x 480, H.264, 30fps, bitrate 244 (see screen shot below). It was captured from my computer using Snapz Pro X.
I imported the clip into PrCS3 and was surprised the clip preview and composite preview were displayed at less quality than the original (even made sure the quality mode was set to "highest"). The video clip was squeezed a bit and the clean edges of my vector art were jagged. The entire thing seemed out of focus.
I thought the exported video might be better quality. I exported the sequence using the following settings:
But the results were no better (I've actually gotten better results using iMovie HD). Below is the final exported movie.
Any help from the PrCS3 community would be greatly appreciated.
Thanks,
Justin
Providence, RI

Hi,
capturing from your computer would give you square pixel aspect ratio....and you're using an aspect ratio for SD TV ( ntsc ), so it is stretching ....no longer a perfect "circle" in the paw print...
Your project setting should be made in custom / desktop ( dont use a preset )...and set it for 720x480 square pixels progressive ( no interleaving ), 29.97 fps...  the codec choice for rendering when you set up the project could be dealt with later on if this solves your basic problem..
your export would then be the same as your project setting....720x480, progressive, square pixels, 29.97 or 30 fps ...should be good.
one note: h264 is already "compressed" quite a bit....its a "delivery" format...for viewing ...not really meant to be edited...know what I mean ?  So you will lose some quality due to that stuff already being compressed...
but your pixel aspect ratio being "fixed" with the above should improve what you see quite a bit.
good luck

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