OK, here is more info:
Input files are MPEG2 (720×480, 29.97, 9MBPS) and AC3 (48KHz stereo) from a Canon FS20. When I view these files directly on TV or PC the video quality is GREAT – very clear with good color tones/saturation.
The videos also look good in Vegas Movie Studio – until I render them and export to DVDA. The quality at that point (in DVDA) looks like “cellphone”. Even my Text overlays are fuzzy/not sharp.
I have the Vegas project set to match the video/audio files and I am rendering using the “Make DVD” function using “best setting”, “Blend” interlace. I have also tried rendering using other templates with no improvement.
Apparently the decoding/edit/encoding of the MPEG file is really taking a toll on quality. Would 3rd party MPEG codecs help here or is MPEG2 just not edit-friendly no matter what?