it depends on the quality of the source, and the size of your TV

i have trialed DIVX 320x280 and 720x480 and the lesser resolution will get banding noticeably on a large TV as its enlarged to PAL resolution. Banding is noticeable on dark backgrounds in portrait scenes with minimal motion.

thats why i am hoping to kick out to a 3rd party encoder to see if the change in resolution can be offset by the better encoders