Replying to HMC 40 and FCE Help.

Ok, I recently purchased a panasonic HMC 40 over the summer and have done quite a bit of filming with it. Im very happy with its performance and the footage looks great on FCE. But when i go to export to vimeo is where i hit my problems. My footage is not at the quality it should be and the files are far bigger than normal. Sometimes i get horizontal lines across the screen as well. Ive tryed clicking deinterlace footage before exporting but it doesnt help. I am filming in 1080/60i

I am pretty new to AVCHD and am still trying to figure it all out. I have tried many different ways of exporting with no success. Here are some of my basic settings when i go to export:
H.264
Quality: Best
Frame Rate:60
Key Frame rate:24
Encoding:Multi Pass
Dimensions: Current (557x313)

Heres an example of a test video, where you can see the quality is nowhere near where it should be for a camera of this standard.

HMC 40 Test from Brett Coffin on Vimeo.

Thanks for any help as this is a very frustrating problem.