Yes, you're right. It looks better.
In addition to my previous comment, here is some information at http://www.adobe.com/support/techdocs/9a86.htm:
"Microsoft DV (NTSC) and Microsoft DV (PAL)
Microsoft's DV (NTSC) and DV (PAL) codecs are used to compress video transferred to and from a...
I believe that it has already been compressed (or lost resolution quality) during capture. Please check your raw avi file size. In my case, a short movie of 300 minutes, the file size of the captured file is about 1 GB. But, here, let's make a calculation:
720x480x3x29.97x300=9,321,868,800 Byte...
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