Is there a way to avoid/fix the deinterlaced artifacts when scaling jpeg stills ? I mention deinterlaced artifacts as the straight lines on the photo have the staircase artifacts when scaling lightly between two anchor point, but in reality i don't think it a deinterlace issue as the video and timeline are progressive.
The still image should be somewhat larger than the video frame size if you wish to pan and scale the image, as that will provide extra pixels to work with so that the source does not need to be "blown up". The more you want to scale, the larger the source image should be to start with.
Next, you may still get flickering sometimes during motion on fine details of image. If you do, add a small amount of "Gaussian Blur" in Photoshop (using a COPY of the still, so as not to "ruin" the original). Using just 0.1 or 0.2 usually does the trick for perfectly smooth motion, without the viewer noticing any blur.