As I say in my books, you can deinterlace your freeze frame and you can set it to square pixels rather than anamorphic in the settings. But how you do this depends on which version of the program you have.
In version 7 and earlier, you click the Settings button after you choose Freeze Frame and set Deinterlacing and 640x480 square pixels there.
In version 8, you don't use Freeze Frame. You use Share/Personal Computer/Still Photo and you need to manually create a export preset with Deinterlacing and Square Pixels. Though once you do, it's there forever.
I tried a number of times to create the right preset but to no avail.
The 4 options I get in advanced settings, after selecting 'Share/Personal Computer/Still Photo' are the following:
1. The type of file (jpeg, tiff, etc)
2. Frame rate (I leave as is)
4. A number of choices, the first of which is square pixels.
There doesn't seem to be any place for 'deinterlacing'
Progressive is deinterlaced.
Hope that helps,
Creating this output preset is covered in my Premiere Elements 8 book. I guess I should have checked my notes!