On the issue of hardware encoding and whether it preserves the interlacing, I do believe the PVR-250 I have in my machine does indeed preserve the interlacing in the MPEG2 stream it creates.
Yes it does. The problem is, no video card appears to be able to do TV-Out while retaining that proper interlacing information. The instant the card does any sort of scaling of the picture (to do overscan, for example), the interlacing will no longer match up with the TV scan lines.
Bob deinterlacing makes up for this by converting each field to a frame and then sending ~60frames per second, rather than 60fields per second. This retains the smoothness of the original recording, but not requiring fancy output where everything lines up right with the interlacing.
The PVR-350 has dedicated hardware to output the video such that the interlacing matches up with the TV's scan lines, as that is what it was designed to do. A video card with TV-out, however, seem to be designed to output your computer desktop (or games or whatever) at various resolutions and have them all look relatively OK.
I think I've probably used some wrong terminology here, but I think I've got the gist of things right.
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