Convert it to DV AVI. This is the best editing format. It will not improve the quality of the clips - it will just make them easier to edit. But be prepared for some large filesizes - this is normal for DV.
What quality does your TV capture card capture in? What is the frame size, framerate and compression codec used on the clips? The quality of the final output cannot be made better than the quality of the original footage.
Here is a free converter:
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