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I'd be interested in this as well, as I've observed the same. I've always sort of suspected that "deinterlace" in Premiere really just meant "toss out one field and line-double the other". That the standalone Windows Media Encoder seems to do a better job suggests that maybe it's using motion vectors to intelligently decide whether to "bob" or "weave", which is what higher-end DVD players often do when outputting interlaced video to a progressive display.
CS4 now decides for you to deinterlace or not based on the export option and source material. Which is why there is no longer a "deinterlace" checkbox in the export options.
You will have to decide yourself on the quality. You can still perform your workflow if you wish to compare.
On the flyout menu there is an render high quality option. The main purpose is to improve scaling. It does improve scaling quality but increases render time significantly. I havent tested to see if it also improves deinterlacing where appropriate.
> I havent tested to see if it also improves deinterlacing where appropriate.
It does significantly improve deinterlacing - results are similar to AE when "Preserve Edges" is selected. Actually probably exactly the same as AE's Preserve Edges.
However, it's not yet up to par with the adaptive, motion-compensated deinterlacing available with 3rd-party tools. (Which coincidentally also take a long time to render)
Excellent -- thanks for the info everyone.