Help encoding AVI interlaced YUV2 4:2:2 to MPEG 2 interlaced output

I have captured VHS home videos to an AVI file in YUV2 4:2:2 NTSC 720x480.  I am trying to encode using Adobe Media Encoder but am having issues because the program keeps thinking the source file is progressive.  When I use mediainfo, it clears shows the source file is interlaced.

I have tried many settings but it basically bois down to this:

- at 29.97 and upper field first I get jagged lines wheneve the camera pans

- if I set 59.94 I get rid of the jagged lines but my output is now interlaced - I would rather keep it interlaced to avoid the artifacts I get from deinterlacing.  I have also read there are other tools that will deinterlace better.

Is there a way to keep this interlaced but avoid the jagged lines when the camera pans?

Please help.