Ok I have been reading up since I posted this so have a bit of better idea now, don't let this stop you though

. I don't need to capture the images as this size no, but I'd prefer to still capture at a 4:3 ratio if possible.
I have used different settings as you suggested and these are better, but still nowhere near as nice as I'd like to see them. I have captured at 800x600 and the resize of this looks a lot better:
than the former:
I'm still concerned about how it will react to transforms and effects in premiere though. Is it not possible to edit the whole thing in sqaure pixels at its native resolution and convert to PAL later, without quality loss?