I am archiving 8mm tapes. Want to have the best of both worlds - TV & computer, so decided to do 352x480 MPEG2 interlaced for TV, and a separate deinterlaced version for computer (which is the subject of this post). My target computers can be slow, so MPEG2 is better than MPEG4/DivX. On the other hand, I want to fit at least 30 minutes on a CD, so need to keep the bitrate under 2500-2700. Now what is the best resolution to encode?

Say, I capture 480x480 Huffyuv and smart-deinterlace. Noisy 480x480 MPEG2 may need >2700kbps for best quality, so it is better to resize down before encoding & there are several options:

1) 352x480, same as for TV,
2) the reverse - 480x352, close to the final 4:3 aspect ratio,
3) other (for example, 400x400).

With correct aspect ratio settings in TMPGEnc, all resolutions play fine with PowerDVD, but which gives the best quality? I did a quick comparison, and it looks like 352x480 (so much advocated for TV) is worse than 480x352. But I wonder if people could share their opinions/experience on the subject. Thanks.