I gave up on the PCTV software & went with the Beta WDM Driver & PowerVCR II. The PowerVCR II works great, is stable, and will capture at 640x480 directly to MPEG 2. the 320x240 limit IS due to the software that ships with the card. There is a noticable improvement in detail when I capture at 640x480.
As for capture quality, that is somewhat involved. I had planned to record directly to SVCD or XSVCD format.
I am running a 950 Mhz Slot A Thunderbird Athlon, and 80 GB 7200 RPM drive & 512 MB memory limited to PC-100 on an Irongate chipset. Not the fastest system around, but still pretty fast.
Mpeg 2 compression is VERY CPU intensive. The higher the compression ratio is, and the higher quality you want the image to be, the more CPU power you need. Real-time Mpeg2 compression will NOT give very good quality and/or compression on most current CPU's.
In low action frames, the picture was great, but in high action parts, the picture degraded with lots of noise & artifacts.
The solution was to capture at higher bit rates (with lower compression then needed, so the software can optimize the picture for quality). SVCD's use a bit rate of 2500 at 480x480, I found I needed to increase the bit rate to 8000 (at 640x480) for the captured file to look as good as the original signal. Of course that is way to high for SVCD, and it also takes alot of disk space (1 MB/second or 3.6 GB/hour). However, this way I now have an excellent quality source file.
I then used TMPENC to re-compress the file as a SVCD compatable image @ a bit rate of 2500. Using the highest quality (and slowest) settings, TMPENC produces a SVCD file that looks almost as good as the source, and at less than 1/3 the bit rate. Only problem is it takes about 6 hours to compress a 30 minute file
I assume if I had the latest 2GHZ+ CPU & DDR Ram, I probably could get acceptable Mpeg2 compression on the fly, but to get as good a picture as I'm getting with TMPENC, I'd probably need around a 3 Ghz system.