Quality loss ... help!

Hi, I'm using Premiere 6 to edit a short. I shot it on a new 35mm converter, and the captured footage, when I open it from my bin, looks great and sharp. Only problem is that it's 180 rotated because of my converter.

Now that I'm editing, I've found that in flipping the image (I've tried using motion, and using horizontal/vertical flip) there's a huge decrease in quality in the play mode -- and that when I exported, it's as blurry as it is in play mode.

Can anyone help me with this problem? I prefer final cut, but for this project I have no choice but to use premiere, and for the life of me I can't understand why rotating the image should result in quality loss.
 
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