Fixing overexposed sea in an AVI to flash conversion

[PositiveFuture]

I have some nice shots of overexposed sea, light playing on the waves for the intro of my film. When I try and convert it down it turns pixelly/blocky as hell.

I'm using freewarre converters at present.

Any ideas to improve things? Step one, do the best I can with freeware/less than 50 dollar converters. Step two, buy something better.

 

[PositiveFuture]

Update: Videozilla's doing pretty well at the moment. Best of about 5 different converters. I'm impressed.