Hey! I do a lot of this stuff, try this:
Select the clip (picture) you want, go to the effects and apply Gaussian Blurr on the picture.
It will probably default to the value of "2". Change the value to 0.66 or any value under "1" (usually for me I use from 0.25 to 0.75)(you have to type tis values since the range goes: 1,2,3,4,5,6.... you want zero point something.
This mild blurr will smooth your picture and all the jaggy, specs and "high definition" from a 300 dpi scan will dissapear.
Let me know if it work...
Good Luck!
Daniel Postan
www.televisionworks.net
Televisionworks