Rempeg2 settings to keep highest quality.

[Tez12345]

I'm using Repmeg2 to reduce a 5.5 gig movie down to about 4.5. These are the settings I'm using

Output Resolution: 720 x 480
Frame Mode: Progressive only
Search Technique: Gradient
Perfoemance: integer DCT (faster)

Scale factor(%): 88

I read some guides that those settings would speed it up some but retain the quality. But when it is done the picture is grainy and jumpy. Any suggestions???