puzzled with mpg2 results

I am puzzled once again with the result of a video after compressing to mpeg2,


Here are some of my settings when compressing
Filters added to DV: De-Interlace (Lower (even) to all footage.
Total Vtracks: 8

File/export/using QT conversion
Format: mpeg 2 @ double pass, 5.5mbps to 7.5mbps set at "better" (from the good, better best options) motion estimation.

Edited w/fcp 5.0.

Here are my issues:

Are my interlace options correct? It seems as if i cant still see a little jag ed edges. Frames that were cropped in the filter tab to appear as letter box, i see edges around my video frame and lines (as a border) all the way around the video frame. Key framing also appears jagged when moving from right to left across/up/down the screen. I have multiple frames open each one timed and key framed to move after or around each other.

Can anyone help me understand what I'm doing wrong? I would post my video up on the net for you to see but do not have site to host it on.. This is the first time i run across this problem. Its is the first time i use more key framing with cropped multiple frames appearing at the same time and moving.

Any one? Don't be shy now..