Not really "grainy", but some digital processing issue somewhere. It seems to be more TV related.
1. What does the TV's menu look like?
2. What does the video from the sets internal tuner look like? (You do have an antenna connected for when your DTV gos down don't you??)
3. How long are these cables?
4. Have you tried the component input?
5. Have your tried another device; a DVD player?
Abundant OTA television is what makes this country different from all others. Lets keep it this way.
The Internet is no place for streaming video.