The magic checkbox in, say Flash Video Encoder is there for a very good reason – much of the footage you get from clients will be interlaced, and you will see just what that is in any fast motion video:
Interlacing smooths out motion (perceptually) by showing your eye alternate horizontal lines offset from eachother by one line. What we see here is the a frame grab from an interlaced video, and two possible deinterlaced interpretations of it. These are created by taking every second horizontal line and duplicating it offset by one line vertically. If you start on line 0, we are deinterlacing on the even fields, and if you start on line 1, we are deinterlaing on the odd fields. Either way, it prevents that ghosting on web video but reduces resolution somewhat. This shouldn’t matter too much to us since we typically downsize web video anyways.
What works for me, anyways is to produce and edit the video in native resolttion, and if interlaced, keep it that way. This applies to after effects and premiere pro etc.
Make sure the motion graphics mixed in with the footage are interlaced if the fotage is, otherwise the downstream deinterlacer on Flash Media Encoder (or whatever) will try to deinterlace what is effectively progressive video, which does not look nice.
As a flash developer, you get asked to encode a heap of video files, and the best assurance of quality is to be aware of the problems that might affect quality and test, test, test. And test.