I decided to build a DVD to see how it looked on the TV. I looked as crappy as it did on the computer.
I redid my images, resized them to 720×480 and imported them into Premiere. Premiere indicates to me that the pixel ratio is 0.9, but I’m sure it’s 1.0 since it’s coming from a straight resize in Photoshop CS (I left them as is, I didn’t “Intepret footage”). I unchecked the box “optimize stills” and now it looks relatively good on the computer and on the rendered movie.
The only negative is the pixelation during the cross disolve that was added between stills when I did “automate to sequence”. Once the effect is done, the picture is sharp without any jaggies. But once the cross disolve starts, the still is pixelated again.