hey Paul,
I ever have the same problem, but I have another way to get better result of progressive rendering, usually i tried to export .avi progressive, uncompress,it is good. then just in case if you like to export it to DVD or m2v files, better render it on after effect,it has better quality even u have only 1 pass.
I think the rendering process of CS3 is not really good, i got problem by trying to export .m2v files using 2-pass progressive, but the result just interlaced. and if you use CS3 without any render-card. the best slow-mo percentage is around 60% lower could be a problem.
does it helps?
Joe