In a nutshell, DV will never get any better than the original, however the graphics and text you add to the timeline will get severely degraded when compressed by the DV codec. So, you have several ways to deal the issue, but the best and easiest is to capture and edit DV as DV, then when you're completely done, just go to Sequence>>Settings and change the compressor to ProRes, then re-render the entire timeline. This will not improve your DV video quality, but it will substantially improve your text and graphics, leaving them essentially unscathed by DV compression.
See the post below for a further explanation if want more info...
http://forums.creativecow.net/readpost/8/1011833
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles
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A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, Indie Film & Documentary, and Film History & Appreciations forums.