Panasonic HDC-HS250K - calling owners past and present

I just got this camcorder 1 week ago and I am having some issues with video quality. I am primarily a point-and-shoot user though I will make the manual adjustments if necessary and I know enough to do so at least.

My issue is with blurriness in the finer details of the background. I do most of my shooting outside while hiking with my dogs. Many of my shots are of landscapes and the pups. I took a test video (which I will upload raw somewhere later) and while the dogs running around look ok, the trees in the background are blurred together in most spots. I tried iA, scene mode and even some manual. This is output via composite directly to my TV to take the PC out of the equation. I suppose I expected better quality but I am still considering the possibility that there is some other issue. Any feedback from other owners?

p.s. I am shooting in the highest quality mode.

Other thoughts:
I have a few days to return the Panasonic and the Canon HF11/HG21 is still a consideration. However, I have not seen how my shots look on one of those cams yet. All the Vimeo/YouTube video in the world won't show how the cam performs at my amateur level. The Canons are also very poorly constructed whereas the Panasonic is rock solid so that is a concern. Don't get offended Canon owners. I know the Canon image quality is usually excellent but even the reviews support the fact that the rocker switch is crap, the plastic is cheap and the camera has an overall feel of cheapness to it. Still, my compact is a Canon and despite being poorly made it takes great pics for a compact (even though the LCD is 50% dead after 1 year).

Hi and thanks for the reply.

(1) Sorry I was in a rush and I made an error. I am using a component cable rather than composite. Component shoudl be quite similar to HDMI I think. I am waiting to get an HDMI-to-HDMI-mini cable but Firefold is sold out and Monoprice is having major order delays.

(2) I had considered this also but as this was my 1st HD camcorder, I was not sure if the issue would be so noticable. In other words, I didn't know the DoF was so shallow.

(3) I actually was at wide angle (zoomed all the way out) but I was close to the dogs. Speaking of which, the wide angle is terrible on all of these camcorders so I do plan on getting a wide angle lens.

Glad to see Monoprice is back on schedule but I'm not a fan of adapters. I also just noticed the HDMI-to-mini cables are only 30AWG and not category 2 certified (though I do realize they may perform at cat 2 anyway) - none of which matters since you are out of stock anyway. heh

Back to the camcorder ...

Thanks to your reply nsnqst, I eased up a bit on my expectations of not only this cam, but others in this target market (consumer HD). I took the cam on a hike today and the video quality was excellent. Color reproduction was great also. Motion was smooth. Macro mode w/ zoom worked great on an abandoned hive in a tree. In short, I finally saw why this cam got such good reviews from some sites and individual users.

My video indoors is still not to my satisfaction with 300W of incandescent overhead light. There is almost constant noise and it becomes painfully obvious with even the slightest zoom. I guess it needs more light.

I wish I could afford to throw another $700 down on a Canon and compare side by side but atm that's not going to happen. Anyway, with the nice sunlight we had today, I finally saw what the Panasonic is capable of.

p.s. I also learned that my wife shoots like she just downed a bottle of Jack.