Imovie - Still Image Quality Problems

I want to make a slide show with sound track for distribution on CD and DVD. I'd like to use iMovie because it allows a good degree of contol in terms of duration of display of individual images.

My problem is that imported still images appear very pixelated no matter what size the original files are. I have tried everything from about 5mb down 300kb at resolutions between 300dpi and 72 dpi but I always get a very poor level of image quality.

iPhoto works very well as do other freeware applications but only iMovie offers the degree of control I need.

Please help!