compression/interlacing question - sorenson/avid

I have read through some of the previous threads, but haven't found a situation that mirrored my own, although some similarities. I feel like I need to describe a bit before getting to the question.

I shoot DV with an XL2 primarily. I edit on an Avid Media Composer on a Power Mac G5. I generally compress things where I work (after hours;) using Sorenson Squeeze 4.5 on a windows computer.

I transfer things from home to work using a high quality Quicktime Movie, and I am attempting to compress to 720p/h264/mp4 file for upload to the Vimeo website. I seem to be running into interlacing issues--parallel lines/sawtooth edges/etc.

I have heard that it is best to de-interlace prior to compressing in Sorenson, so I have done this when creating the .mov file out of Avid. Is this the right thing to do?

Basically, I need help with this workflow (dv to high quality .mov to high quality .h264)--I want to post high quality files on the net--what is the best way of going about this? Is there a different method that I should try? Am I missing a setting?

I have experimented with various settings, and researching, but ... I am not the most technically savvy individual, so if there is more information I should add to this query feel free to let me know. Thank you.