I'm trying a few setting when rendering HD 1440*1080 footage to WMV, but feel that the image could/should be cleaner....I'm rendering to 320*240 (pixel aspect-1.333), but it doesn't appear as sharp as it should.
In order to retain some of the apparent "sharpness" of the original (stemming from its resolution), apply some Unsharp Mask to it before rendering to 320x240; it will add some edge enhancement and increase the contrast.
Winrock's advice still valid - increase the bitrate until you're satisfied!