DVDSP3 Flicker Problem

I am at my wits ends with a project I have been working on since the begining of August and I hope one of you amazing men of knowledge will be the first ones who will be able to assist me.

I am using FCP4 and DVDSP3 on a G5.

It is a 73 minute documentary where the filmmakers use a lot of scenes where people are sitting around a flickering fire. The flames are in the foreground and the people are behind with the light flickering on their faces.

The film was digitized using the original edit machine G3 Mac using Media 100. The digitized media was saved onto my external HD for transfer to my G5 and FCP and DVDSP.

I downloaded the plug-in from media 100 for the media and imported it into FCP for mpeg2 compression. I have tried every imaginable setting in compressor, such as, fast bit rate, slow bit rate, open GOP, Closed GOP, some of the filters, compression markers etc but when I burn a sample project using DVDSP3 the fire scenes flicker/studder terrible. If you had epilepsy you would go into a fit. I have tried compressing smaller clips as well and it does not help.

Funny thing is, I have used smaller clips for the chapter menus and they do NOT flicker. It is only in the main feature at full screen.

I really need help with this. If I cannot get this project right, I will lose out on a future contract with the producers. Can anyone offer any assistance?

Thanks in advance.