Sounds like the bottom of an “o” is sort of flat, like the bottom couple pixels that make it round down there are gone.
What size is your Photoshop file? Is the text rasterized?
Here’s my workflow/; Make the PSD file 720 x 534. Build all your layers. Do not rasterize type. When everything is done do a “Save As” and name it 480 final or some other name. Change the image size to 720 x 480 not constrainign proportions. This squeezes the type to the correct size but keeps it vector (clean).
Now you can collapse your layers or rasterize your type and it should remain clean.
If you’re PAL file sizes are different, but you get the idea. In the end you will end up with an unsquished file that you can edit your type and resave and resquish if needed for revisions, and the squeezed one is a copy with the type that was squeezed in vector format and rasterized for use in the final menu.
Rich Rubasch
Tilt Media