Some of that sounds good, but I need some clarification. Are you saying that when using motion, an image will be stretched to fit the frame, and then any motion/zooming will be applied to the stretched image? If so, that really does not sound very good. I don't like the idea of Premiere stretching the image so it's too large, and then having to shrink it back down with an effect.
Forget about all the motion an picture and picture talk. Here is a simple, straight forward question. If the frame size is 720x480 and I have a clip that is 300x100, how can I place it on the timeline and have it be at its natural size? Again, it sounds like motion/zooming can only shrink the image back down from it's stretched version, and so the pixels would still get messed up. So how else can I do this?
Thanks again for the ideas, those of you who have responded.