I create title pages in Illustrator, then import them into PE8. The rendered movie file has very fuzzy text! Where the built-in titles are very crisp. Why are Illustrator files so poorly rendered?
Have you rendered your timeline? Press Enter so that the red line above your clips turns green and your graphics should look cleaner.
But a lot also depends on the size of the original graphics. Illustrator files are vector, and have no resolution. However, when you bring them into Premiere Elements, they are rasterized -- so, if they're not at least the size of your video frame, they can become fuzzy when you resize them.
Vector Art must be Rasterized for use in Video. Though PrE can Import AI Vector Art, it does a pretty poor job of the Rasterization. I will Place all AI Vector Art into a New Image, that matches my Project's Frame Size, in Photoshop, and let that program do the Rasterization (much, much better), and then Save_As PSD (native format of PS and one that PrE works very well with). I cannot speak for how well that PSE does this, but I would assume that it uses the same exact algorithms, as does Photoshop (the big-brother version).
This PrPro-Wiki FAQ will offer some tips too.