Just to back John up:
Shane's Stock Answer #2: Blurry playback
ONLY JUDGE THE QUALITY OF YOUR MATERIAL ON AN EXTERNAL NTSC MONITOR, OR AT LEAST A TV.
1. Disable overlays on the canvas
2. Make sure you've rendered everything (no green bars at the top of the timeline
http://docs.info.apple.com/article.html?artnum=24787
Video playback requires large amounts of data and many computations. In order to maintain frame rate and be viewable at a normal size, only about one-fourth of the DV data is used in displaying the movie to the screen. However, the DV footage is still at full quality, and is best viewed thru a TV or NTSC monitor routed thru your camera or deck.
Shane