iMovie export problem

Took an mp4 video and added a black fade to the beginning and end of it and then when I export it, the video quality is noticeably grainier and almost 4X the original file size. So worse quality and 4X more megabytes.

Tried tweaking every setting I could think of that would be responsible for it but can't figure it out.

Here's a screenshot of the settings I'm using. I have 1280x720HD selection for resolution because when I select "Current dimensions" it exports it as smaller than current and I don't understand why -- I know because I open the original file and it's bigger than the one I export from iMovie.

Using iMovie '09 version 8.0.6.

Would really appreciate your help to solve this!

 

Free cookies and milk to the solver of this problem!

 

$20 Amazon.com gift card to anyone who can solve this problem for me. I'm dead serious! Help me figure it out and I'll e-mail you a $20 Amazon.com gift cert.