I have a progressive scan DVD player and a progressive projector (10' screen), so that is likely not the problem.

I have tried downconverting with both Lancoz03 and Bilinier, all have the same results.

I did the downconvert without sharpening, tested it out, there is less flickering, but still a noticable amount.

Flickering takes place around both horizental and vertical lines.

When I deinterlace, the video is still 30 fps. I'll post a video of how it looks after deinterlaced. It seems a lot softer than what I would expect (i used blend fields). Though since it is a 30p file, I'm not sure what the deinterlacer is doing.

I tried a gaussian blur on the video, it did help, but washed out a lot of detail. I'll try the vertical blur later on. I'll also look into other deinterlacing methods.

I'll continue to test various file settings, and I will post results from various tests as I do them. I'm going to be out of town for a week, but will do some more exploring when I get back.

I appreciate the help guys. :)