What type of camcorder did your original footage come from?
The type of camcorder -- and the project settings you use in Premiere Elements -- is about 90% of the quality of your output.
Also, how are you judging the pixeliation?
Remember, when you output a WMV or MOV, you are likely outputting a 320x240 pixel image. If you output an AVI, you're outputting a 720x480. Your computer monitor, on the other hand, is likely at least 1280x960, which is twice the height and twice the width of an AVI. So, of you're looking at it at full screen, you're looking at it at a much higher resolution than it was meant to be viewed.
But, since your concern is with things like effects and fades, I'm guessing the real issue is your source video.
As Steve points out, the Export quality will be dependent on the source footage and on the chosen Export CODEC. WMV is heavily compressed, so if your footage is already compressed, say MPEG-2, things WILL show as being less sharp, especially with much cross axis motion, either camera, or subject. MOV can be heavily compressed, but not always. If you need MOV, and can use it, try the Animation CODEC. That yields good results for me. I receive a lot of Mac work, and MOV [Animation] works well on my PC's, but then I do have QT Player, which will be necessary.
Good luck, and please let us know about that source footage.
I made animations in flash, different shots to a whole animation as different files, and exported them as AVIs at 75 percent quality which still looks really good on screen. Then I imported each of the AVIs to edit together and add sounds and music in Premiere. My original flash workspace was 720 by 480 and I export at the same resolution from Flash and from Premiere. I can work on the project and export the avi at maximum quality with great results, BUT the parts of the animation that have been faded, sped up or slowed down are the parts will become pixelated, so I end up with a video that is partially crisp and partially rough.
Here is an example of what I'm talking about. Here is one still from the animation
and here is a still from the shot right after it.
Both of these stills are pulled from the same AVI. The only difference is that the 2nd shot was sped up slightly in the Premiere project and the 1st was not. I thought that maybe rendering before the export would help, but it doesn't.
My source footage are AVIs that were exported from Flash. The resolution I use in flash is 720x480 saved at 75% quality which looks great. In Premiere I usually export at WMV for the web and it isn't pixelated, but when trying to get high quality output on a DVD the WMV shows up as being pixelated instead of slightly more blurred than the original like it does on the web. Saving as a maximum quality AVI makes it clear, but if I have edited any of the footage in premiere like a fade out or speed adjustment, those shots become pixelated. Rendering it all before exporting just seems to make the whole project look worse. I did try saving a MOV under Apple Animation and it looks pretty good on the monitor but it still shows up pixelated on DVD, the whole thing, not just certain parts, but the pixelation is not that bad.
For comparison I have another animation made and edited the same way. The only difference is that there are no Premiere video effects used or text added, just the avi clips edited together with sounds and music. On DVD, the quailty looks fantastic. This animation fades to black at the end, but I avoided the pixelation problem by doing the fade out in the original flash project instead of doing it in Premiere.
Going back to the AVI Export from Flash, what are the settings there, and especially the CODEC chosen. "AVI" is but a wrapper, and can contain all sorts of "stuff." This ARTICLE will give you some background.
When I am creating intermediate files, that will be later edited in another program, I rely on the Lagarith Lossless CODEC, which is great and free. It works in all of my programs, but that might depend on the exact versions that you have for both Flash and PrE 2.0. You will need to experiment to make sure that when it is installed properly, YOUR programs can use it.
Good luck, and hope that this helps,