Haibane Renmei is actually progressive footage. So no deinterlacing is necessary. Your frame cap looks like you tried to deinterlace. Although, sometimes the footage has jaggy edges so you'll just have to live with it. Here is about the same frame using the script I use.
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Deen("w3d",2,3,5)
Crop(8,4,-10,-2)
BicubicResize(720,480)
I crop the top and bottom a bit too, because sometimes the picture doesn't fill the whole frame. It also varies from each DVD/episode too, so watch out. Now as for resizing back to 720x480, I do that so when editing everything is back to standard. I've never noticed any major aspect ratio issues since I try to keep the cropping to the same ratio. I used to sharpen it, but I didn't like it and wanted to keep compressibility good.
Insert clever text/image here.