OK, so here is the update....
I removed my Matrox G400 TV card and installed my Extreme98 (BT87
card. (I still haven't received my new WinTV PVR) The Phillips tuner on the card is so bad, I had to use a VCR as a tuner but I was able to finally capture at 704x480 without ANY dropped frames.
The Extreme98 card was still pretty noisy and it reverses the fields so I had some correcting to do but I pluged away using the various scripts and suggestions I found on this site. I use so may filters that it took 6 hours to encode a 40 minute episode of Enterprise (widescreen).
With my new 480x480 Mpeg1 encode I test on my DVD player.... yuck.
It doesn't look any better than my 325x480 encodes done with my Matrox. In fact, the Matrox encodes look WAY WAY WAY better and require much less fiddling. Also, the MJPEG encoder (which looks great at 352x480) is smaller than my PicVideo captures.
The moral of the story:
-resolution isn't everything
-the "quality" of the capture card matters
P.S. I just watched Red Planet that I captured from TV with the Matrox and it looked like a RIP. So the Matrox is going back into this machine and I'll try installing my RAID drives. (The PVR is for my MythTV box anyway.)