Why is Encore CS6 Menu quality so poor/bad?

Hello All,
My client and I are frustrated on the image quality of the menu in Encore when creating a Standard Definition DVD.
The menu source is a .psd. Tried various resolutions and once the dvd is ceated the image is very pixellated and hard to read the text in the logos (see attachment). Also tried making a motion menu with that image by creating a timeline with it in P Pro. Same results.
I understand that this is SD and that the customer is playing back the 720 x 480 image on a high resolution monitor which doesn't help.
The videos portions of the DVD are OK (mpg2) and the graphics hold up a lot better in the video portions.
Would appreciate any advice on this issue as my client and I are very frustrated.
I will try and test this on another system today.
What do you think about a hardware/software (something other than Encore) solution to create a decent looking DVD?
Thanks in advance,
John
This is a full frame screen shot from the DVD.

When you bring a higher than DVD resolution image into Encore, Encore downrezzes it to the project setting when you render the menu and/or build the project.
You can only avoid that if you make the background image the correct size. You can only avoid Encore rendering if you don't add any other elements other than highlights (the layers in photoshop with =1, =2 etc.).
If any of the images are part of a highlight layer, you get big problems; I don't think that is an issue for you.
Logos have often been scaled in various ways; I wonder if that could be having an effect.
But, I did not think the image looked that bad once it had it set to the DVD pixel size and was viewing it at the size.
You certainly do not get an accurate test viewing as your client was on a large computer monitor.
Create a test disk and view on an HD TV with an upscaling player. For me that is the modern, practical test.
The other test you might do is to take the logos out of the equation by making a menu with several fonts/sizes to simulate the text issue in the menu. DVD and small text are just not a winning combination. The logos may be scaled too small for so many on one screen.

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