Why is MP4 (MPEG4) Compression direct from FCP (vs from DVD) lower quality?

I am creating video podcasts and I have been fighting this issue for a couple weeks.
When I compress using mpeg4 directly from QuickTime I get unacceptable pixilation surrounding the subjects but when compress the same file from DVD using handbrake or iSquint it looks just fine. I am using the same settings.
Creating a DVD for each compression is silly work around. Does anybody have any advice here?
Note: when I compress using h.264 from FCP it looks fine, however I have decided against the h.264 codec at this time due to the processing toll it puts on the end user that can cause jumpy playback.
Power Book G4   Mac OS X (10.3.9)   FCP 4.5

I would rather use mp4 than h.264 and I have seen videos (eg. tikibartv) that look great with the mp4 codec.
Does anybody have any advice here?
I take it you've tried a workflow which emulates the site you referenced, such as...
File > Export > Using QuickTime Conversion
In the Format drop-down, select MPEG-4
Click on the Options... button and...
Alter Image Size to 320x240.
Change the Data Rate to 500
Set Frame Rate to 15
Alter the Key Frame property to 75
Click OK
After you've selected the right destination folder, go ahead and press Save.
This will produce a .mp4 file. If you want to make this a .mov file, change the extension in the Browser.
...and that hasn't given you the results you're looking for?

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