Problems editing 'H264 MPEG4 AVC' on CC

Hi all,
I took some video using a webcam that I need to edit in Premiere Pro. I converted it to 'Mov' and the codec info is 'H264 MPEG4 - AVC'. It imports to Premiere but the video appears extremely pixalated and disfigured to the point where it is unwatchable. I have set the sequence settings to the same as the source file.
Can anyone help with this? I'm fairly new to this so let me know if I should provide any more information.
Thanks.

Hi, thanks for getting back to me.
1. Yes, it looks awful in the source monitor too!
2. Both clips play in VLC media player. It being a webcam, the quality obviously is not great but it doesn't need to be for its purpose
3. Dimensions of both are  640 x 480
4. The original clip was .flv so wouldn't open in Premiere Pro at all.
I know it's not good practise to shoot something on a webcam and then edit in Premiere but for this occassion it was necessary and if there's any way to edit the footage that would be very helpful!

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