Daperl, no, your post is usefull, it's the first time i see a so clear demonstration about deinterlacing ! THANKS !

DVD are still interlaced, it means that if you encode above 352 pixels wide, you will have to deinterlace during encoding. But most of the videos you can download (free or non-free) are progressive, so, no deinterlecing needed.

HANDBRAKE does a good job for deinterlacing, you just have to select it in the video page, (where you can crop and resize, in the bottom right)

Low resolution video don't have to deinterlace, because they just keep half of the frames (1 line of 2), so you loose practically half of the details.

The temptation to go for a low resolution video to avoid to deinterlace is strong, but if you want the best possible picture on screen ... you will definitively chose to deinterlace an pick the highest possible picture size.