If you're banging your head against a wall trying to export HD video from iMovie, you're not alone. iMovie '09 has a bug where it doesn't handle interlaced video properly (hopefully fixed soon). Macworld's Chris Breen figured out how to get 720p video out of iMovie, and wrote about it at Macworld.com:
With iMovie ’08, you’d end up with a pretty decent looking 720p movie. But with iMovie ’09, you don’t. And the reason you don’t is because the deinterlace function isn’t working correctly. You can enable that Deinterlace Source Video option from now until doomsday and you still wind up with interlaced video.This is a problem Apple should address. Until it does, your best bet is to export your edited movie as 1080i video and then deinterlace it with another application.
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