I think you’ve posted in the wrong forum. This would have been better placed in the Adobe Premiere Pro forum [link].
That said, check the blend mode in the Effects Controls panel in your screenshot. It is set to Dissolve, which will create exactly the rough pixelation you describe. Try Normal instead.
Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
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