Interlaced handbrake 0.9.8 support:
1) set to dvd preset
2) add :tff OR :bff in the advanced tab, put at end (append).
3) turn off all filters: set to off, set fps to same as source and constant.
Use mediainfo and set to sheet to find if tff or bff
4) feel free to set resolution, etc
This will allow your TV or device to perform the de-interlacing which is far superior than removing half the motion resolution as 98% people and/or software encoders do by default.