Poor quality video after imovie imports it

I have reasonably good quality video (Video DivX 6.0, 640x480, 29.97 fps, Audio: uLaw 2:1, Mono, 8000 Hz) ) which when viewed on my imac in QT looks good. I then import into imovieHD and the quality reduces (lower res and flatter contrast).
The problem seems to be the conversion to DV because if I use toast to do this same conversion I get the same loss in quality (I needed to do this to get movieds into imovie08)
So my question is, given that imovie seems to only use DV (converting all other formats), how to I convert my videos to DV without quality loss (I have all the usual 10.5 software and also TOAST)
Hope somone can help, been banging my head against this for a while now.

At it's heart, iMovie is a DV editing application. When you look at the big picture there are two fundamental video files: those that are meant to be edited and those that are meant to be distributed (youtube, DVD etc). You have a "distributed" file that you wish to edit. This simply means there will always be obstacles and loss of quality. As example, a DV file = 13GB/hour. This is compressed for distribution (commonly using iDVD to create a DVD which only holds 4.3GB). The more compressed the file is, the more quality is going to suffer.
Your file is very compressed and I think you are barking up the wrong tree. What is it you want to do with your file inside of iMovie? I believe there are Divx editing applications out there that will perform simply cuts- but I think they are Windows only. I didn't see anything that would do more than simple cuts, probably because all the individual frame information is gone via compression (which is why iMovie wants an individual frame format).
I may have an MP3 a friend gives me of a orchestra performance. The original recording took place in a studio, mastered via a huge 48-track console. I may want to go back and extract just the trumpet- easy enough with the source material- but not something that can be realistically done with a very compressed MP3.
Mike

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