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You could use the picture in picture effect in order to make the 320 X 240 image look correct with the other footage but it might also look a little distorted after being rescaled. You may want to leave the black borders.
I forgot. You should have done the AE project at 720 X 480 if you knew the rest of the footage was 720 X 480. 320 X 240 is OK for CD-ROM videos.
I see a lot of PIP presets, but cant find the picture in picture effect. How would I use that. some distortion is fine in this case.
Just right click the clip. In the source monitor you should see a tab tile Effects Controls. Click that tab and then click Motion box in the effects control to manipulate the video. You can also click the triangle by the motion box icon to see the paramater's quardinates.
That works well in this case. Before you posted I was experimenting with rerendering the AE with a changed composition size, 361x240. But this seems like a better idea.
This link may help:
Premiere Pro CS3 Podcast #11: Picture-in-Picture and Split Screen Effects
But, to be honest, I'm not sure that's the best way to go. Why not create a custom 320x240 project (using the "Desktop mode"), and then scale your DV clip down, while leaving your AE clips at 100%. It's ALWAYS preferable to scale clips down rather than above 100%; clips over 100% lose quality.
Simply make a new 320x240 custom project and import the old one into it.