Okay, So The Quality Still Is Bad. Heres ALL The Information.
I Filmed With The Sony Nex-5N, 1920x1080HD, AHVCHD 60i/60p, 60 Frame Interlaced.
This Is A Music Video With LOTS Of Dancing And Motion. The Project Was Made In Sony Vegas 10 Pro. The Project Is 3min & 25Sec.
Here Are The Project Settings Which I Get From Media Match Settings. (Upper Field Seems To Work Better For The Poject. Progressive Seems Too Make Wiggly Lines In The Video Despite Having De-Interlace On.)

Here Are The Rendering Settings. ( I Have Tried Sony AVC, Main Concept Avc, And .Wmv And They All Produce The SAME Results In Youtube).

Here Is A Youtube Test I Uploaded With The Settings Above. The Objective Is To Achive Better Quality At 360p.
https://www.youtube.com/watch?v=2QI4hbyGbKE