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I tested out iMovie '08's YouTube export feature and the results were unusable: pixelated chunks the size of ice cubes. You can barely decipher what is happening in the video.
I don't understand why that happened or if there is any way to fix it. YouTube recommends 320x240 (Xvid/Divx) for best results. But I can't access the Divx encoder via iMovie '08 Quicktime export settings.
What format should I export the video to for the best results on YouTube?
They certainly take an official MPEG4 encoder (like the one in QuickTime) in addition to the unofficial derivates Divx and Xvid.. They reencode anyway, so it shouldn't matter which codec you use. Important seems to be that it is in good quality.