However, you are still not going to like the results of your ripped MPEG Streamclip DV-video when imported into iMovie 09 or 11. The quality will get degraded by nature of the latest iMovie programs.
To keep the DV (non-pixelated) quality, and to export the same, you would need to use any of the following: Final Cut Express (for a bit of the "pro-sumer"), Adobe Premier Elements 9 (consumer video editor that is a lot like iMovie 06), or get your hands on the old iMovie 06.
Again, these are what are necessary to edit your ripped DVD and keep them looking as nice as the original.
I found that Handbreak was not causing the problem for me with the pixelated dark scenes; it was iMovie converting the mp4 files into AIC; however, MPEG Streamclip worked really good converting the mp4 I had created with Hanbreak without any pixelation on a 1280x720 movie (just make sure you select 100% quality).
I also found MPEG Streamclip was a lot faster than iMovie 11 converting the file to AIC.
Hope this helps.