I fave had trouble with the rendered resolution of still in my videos. I have inserted bitmap images and high res. jpegs and pics always with the resulting low res image after rendering.
The resolution of your rendered output is dependant on the project settings and the format that you are rendering to. Large formats like DV .avi files are only 480 pixels high. Most of the streaming formats and the MPEG format used for VCD are only 240 pixels high. It doesn't matter how large the original still is, the output will only be as big as the rendered file's resolution.
Thanks Chienworks. The strange thing is I used some of the same pictures in a cheaper editor. It compiled to .avi but the resolution of the stills are quite a bit better.