The best option is third party software. AE will do a good job of separating fields using the Interpret footage panel. Personally I select the field order there, then create a new comp from the footage using the New Comp from selected method, then I double the frame rate of the comp and check out a few frames to make sure the field order is correct and check the footage for clarity. I then add any filtration necessary to try and clean things up and I then render a new production master using a 10 bit or better codec and 4:2:2 or better color and use that footage in my project. This will give you full frames at the field rate (2X frame rate) which you can use in standard frame rate comps and experiment with frame blending methods to achieve the highest quality master.
Others may have a different technique but this one always has worked for me and it nearly matches the quality I can get from $$$ 3rd party solutions in about half the time.
I forgot to mention a very important step. Change the comp you have created from the original footage to the square pixel equivalent for your footage format. AE will take care of the correction, and then do all of the rest of the work in square pixel comps. Do not mess with rectangular pixels anywhere. Do not change the pixel interpretation of the original footage to something that it is not.
if you don't want to buy a terenax for high quality, you can also try this free motion adaptive deinterlacer
that blending mode sounds fascinating. are you just frame blending(draft/best) or are you actually doing soft additive blend mode? I found a way inside AE using timewarp that warps the fields together which can often give clearer results than adobe's default deinterlace.