Youtube Quality Woes

Hello everyone,
I am trying to find out how to improve my normal youtube video quality so that people who watch "not in HD" mode will be able to read and see everything clearly.
I have tried numerous settings and nothing has worked for me so far as my videos are substantially pixelated.
I am recording the video with a Canon Powershot G7 and have tried recording in both of these formats (the two highest available):
1024 x 768 @ 15fps
640 x 480 @ 30fps
My aim is to produce these videos so they can be seen in widescreen mode, so when I edited the 640 x 480 video I just scaled it up to fit into the 1280 x 720 work area I was using in Premiere.
When I was working with the 1024 x 768 video I had to scale it down a small amount to fit in the widescreen area on premiere so I thought this would increase the quality somewhat?
I have a feeling that the pixelation is somehow related to the source video I am recording from my G7 camera. However, when I view the exported video from Adobe it is extremely clear, so I am guessing that the problem is with the Youtube encoding process.
I am trying to figure out what are the best settings for me to use so that Youtube will not present me with a pixelated video once I upload it.
It is all well and good for the viewer to click "watch in HD" but that has its drawbacks, it's slow, some people might not bother clicking it once they see the original video, and if I embed these videos on forums or websites the quality will be terrible and they have no "watch in HD" option to click.
I desperately need to improve the normal quality of my video.
Here is the video I am talking about:
http://au.youtube.com/watch?v=cpowvKFt0_c
As you can see the quality is terrible, that was exported using my H.264 settings:
(The exported video was 59.1 MB)
Format: H.264
Summary:
NTSC, 1280x720, 59.84[fps] (this was meant to be 23.876 but when I corrected this later it still resulted in poor quality video, Progressive
AAC, 192[kbps], 48 kHz, Stereo
VBR, 2 Pass, Target 6.00, Max 10.00 [Mbps]
When you view this video in HD mode it looks fine, but as I stated before it has its drawbacks as some cannot simply click view in HD mode.
I also tried to export in Quicktime with similar settings but it resulted in poor quality video. I have read that H.264 is the format to use so I won't bother telling you these settings unless someone needs to know them.
I desperately need to improve my normal youtube video quality, any help is extremely appreciated.
Thanks.

I've done some searching in this forum on Youtube and found a number of solutions. I've used WMV, FLV and AVI. the lastest one I put up,
http://www.youtube.com/watch?v=zSTyqfZUzN4
is a high quality WMV file and both watched in low and high seems acceptable. If you look at the others www.youtube.com/mustanggenerations on the youtube page you'll I suffered many of the same problems till I reviewed what was in these forums. Now I get my best quality through our own site, using .FLV.
Because for some reason my CS3 won't spit out a WMV file, and get a cant' find writer area (already searched forum here but no real solution yet) I've been reverting back to my 2.0 and now use the WMV export for youtube.
Not sure if all that helps but that's where I'm at with this.

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