When working on a project, you are in a 320x240 environment, often much less
quality than your source files or the movie you will save from the project.
It depends on what your issue is.... if it's the quality of the preview
mode, you can't change it. If it's the quality of the output saved movie,
there are things you can do.
Or maybe you are seeing distortion due to watching widescreen mode movies in
standard 4:3 or vice versa?