A client gave me 14 home-made DVDs containing video of high school basketball games and asked me to create a highlight video. I edited the VOB files in Premiere CS4 (4.1.0) to pull highlights and compile them into a single highlight DVD.
It is very likely that the double MPEG-2 encoding is degrading the material too much. Is it possible to get back to the client's original tapes? That would save one MPEG-2 compression. Otherwise, what you have is probably as good as it will get.
You can also try to increase the quality settings for your re-encoding, including reducing the amount of video you are including on the hightlights if necessary. Use some short clips to test your settings.
I prefer using a frame accurate mpeg editor that does not re-encode anything other than the bits that are affected by edits between gop boundaries. (E.g. womble, videoredo.) This keeps your original quality.
I forget since I don't have CS4 - does Premiere still re-encode the whole mpeg clip including unedited parts? It is not yet a "frame accurate mpeg" editor is it?
Thanks for your help. With some testing I found that checking the box next to the Reverse Field Dominance switch under Field Options greatly improved the video quality.
Good news and thanks for reporting what worked for you.