Low light issues aside, you can get very close to the native output of your camera with edited content. First thing to know is what is your ultimate goal for the footage? It sounds like you primarily want to watch it on an HD television. If so, what size and kind? Is it a large, 1080p set? 720p?
If you're looking to go to Blu-Ray to watch your stuff in 1080p, iMovie isn't the best choice of editors. It's primarily designed for 720p and under, and mainly for short videos to be shown on YouTube, MobileMe galleries, etc. In that regard, the 720p export (now with the patch) looks pretty good. Even the 540 stuff on the TV looks decent on 720p televisions smaller than 50".
However, if you want to step up from that, it's absolutely worth it to pick up FCE. If you've never used it or any other NLE (nonlinear editor) before, pick up a book like "Apple Training Series: Final Cut Express." Run through all the tutorials in there and you'll be comfortable in no time. Edit your content in FCE, output it at 1080p, and burn with Toast. You'll be pleased with the results.
Low light is another matter entirely, and some cameras handle it better than others regardless of their resolution. I know off the shelf point and shoots that can do low light better than some DSLRs. If you're unhappy with what you're getting from your camera indoors, there really isn't much you can do other than improve the lighting. When looking to upgrade your camera down the road, knowing you do a lot of indoor, low light shooting, be sure to read reviews. Most of them test the cameras in this exact situation because it's fairly common. Most camcorders take great looking footage outside on a sunny day. It's the low light indoor stuff that separates the men from the boys, so to speak.