If you are capturing miniDV over a FireWire (not a USB connection), Premiere Elements isn't rendering your video. In fact, it's not changing the video data in any way. It's just streaming it in from the camcorder as the tape plays. So it can't be adding artifacts to your capture.
Are you certain that connected by a Firewire connection?
Was the original video shot by this camcorder -- or was it shot by another camcorder?
Have you ensured your Premiere Elements is configured for PAL video?
The material was recorded using the same camera and connection was with FireWire (otherwise capture miniDV vide owouldn't work).
I uploaded a quicktime .mov file demonstrating the artifact - you can find it in the T-Shirt at the throat:
Using iMovi this artifact will not occur.
Unless you shot in some non-standard format (ie, at a lower quality) I know of no reason this would happen. As I've said, Premiere Elements does not change the video in any way when captured and, if this video is the first clip on your timeline, the program should have automatically set your project specs to match it.
What are your project settings, listed under the Edit menu?
It seemed to be HD previously and is now Showing QuickTime DV PAL.
The latter one is now with the expected quality.
There isn't any chance to modify the Setting.
I will now start working to cut the video.
In case there will be further issues I will report.