Movement is the enemy of highly compressed video. With a limited amount of bits, compression settings allow you to choose between sharp images or smooth movement…not both.
Either rethink the motion part of your production, increase the bitrate or try 2 pass variable bitrate with a maximum setting about 50% higher than your target bitrate and the minimum about 50% of your target.
Media Cache are conformed audio (cfa) which is the audio files created to match the project setting of 48Khz. These should be on your RAID.
It also contains pek files which are the waveforms on the timeline and now with CS3 update with gain changes…wha who!!
Panning/scanning is the worst enemy of video compression…every pixels is changing with every frame and there are not enough bits of data to do both smooth and clear.
Shoot for the web with no pans and no transitions.
Compressing video is about compromises and quality is one. You are probably using inappropriate settings if your compressed video has a .avi extension.
A good starting point; File>Export>Adobe Media Encoder. Set the Format to Windows Media. Set the Preset to NTSC Source to download 512… this would be good for web delivery.
For local playback choose the preset with 1024.
Editing mpeg is tough as it is, but near impossible with Premiere 2. Premiere Elements 3 can do a better job, but still there are issues.
Your best bet is to use a DV camcorder to “pass thru” and convert an analog signal to DV…or get a Analog/Digital converter like ADS Pyro A/V link for about $200.
Import the 16:9 video into a 4:3 project. Right click on the video in the project window and choose “Interpret Footage” and change the PAR to 1.2 (NTSC).
Once on the timeline you have 2 choices as your video now hangs over the left and right edges of the program window and will be cut off on export;
1. Do a pan/scan to keep the interesting parts on screen.
2. Resize the clip to fit in the window and accept black bars top and bottom in the exported file.