two dimensions wanted

I have a video that was shot in regular 4:3 720/480 dimension. I need that video to be dropped onto another video that is a custom dimension of 772/480. I have done this, though I loose all clarity of the original 4:3 video. Is there a correct way to do this properly, or even at all?

More specific information, in case you may be able to tell me how to set this up better:
Video 1, a man in front of a white screen shot in 720x460.
I edited his video on the timeline and left his sequence alone.

I created a new sequence with dimension 772x460, and created a Motion project that is text only, suppose to come up on the screen with what the man is talking about.
I then dropped the edited video 1 of the man into this sequence, but now the video has become blurry. I can't tell if it is because of the dimension difference, or because the Motion project interfering somehow. Though, I have deleted the Motion out, and the Video 1 (on sequence 2) is still blurry.