Issues with Premiere CS3 (filesize/compression/jerkiness)

[IOTroll]

Source files:
MP4, 1280 x 720 resolution
Filesizes range from 80MB - 150MB, general length isn't more than 4 mins per file.
Here's a direct upload to give you an idea of what I'm working with: Eienhikaru (Ibuki) vs TimeAppl3 (Zangief) 08/14/2011 Player Match - YouTube

Edited files:
Target resolution 720 x 480 or higher, something YT friendly, doesn't need to be HD

Attempted H.264 encoding
Filesize insanely huge, the sample of what I want to create ended up being 2.8 GB, big file goes in, even bigger file comes out.
Video appeared grainy and blocky
Video appears jerky with frames that occurred earlier in the project.

Attempted AVI encoding
Filesize acceptable, big file goes in, smaller file comes out.
Video appeared blocky and would have a great deal of artifacting, overall quality was atrocious.

Attempted WMVencoding
Filesize acceptable
Video appears grainy and blocky, and video appears jerky with frames that occurred earlier in the project.

All earlier attempts were deleted, but as time has marched on and I can't get a good finished product I've uploaded the most recent result for comparison:
faultyencode.wmv - YouTube

I feel like I'm missing something large because with the varied attempts and similar results I feel like this should be "obvious," but I can't seem to think around it.
Thanks in advance!

[Kevin Monahan]

Which codec and preset are you using for output?

[IOTroll]

I have tried exporting as Quicktime, this was the only option via "Export > Movie," that I could find an MP4 compresser, but it would keep saving as .mov. This would yield the larger files, too big to upload to YouTube.
Exporting as AVI, this allowed me to try use the FFDshow codec, and H.264, but the resolution came out small and looked like they were compressed too much, looking similar to the example video above, but without the jerkiness.
Using the Adobe media encoder allowed me to try and use H.264, and WMV presets, but this would again have the blocky compression and also include the frame jerkiness.

[Kevin Monahan]

I would give H.264 another go. Choose the H.264 format and a preset that matches your original sequence as closely as possible. You can also try downloading a trial of Premiere Pro CS5.5 and converting with that. Adobe - Adobe Premiere Pro CS5.5 Family