Unless you do some kind of post-processing work, the video will never be better than the original frames. Also just like a flip-book, if you have a big "jump" between keyframes it will look funny. You generally need enough "tweens" in between the keyframes to give smooth animation. HTH
You need to set the video bitrate. I have never used minrate and maxrate so I don't know how exactly they work, but by setting the bitrate using the -b switch, I am able to get high quality video. You need to come up with a bitrate that offers a good tradeoff between compression and video quality. You may have to experiment with this because it all depends on the frame size, frame rate and the amount of motion in the content of your video. Keep in mind that DVD tends to be around 4-5 Mbit/s on average for 720x480, so I usually start from there and decide whether I need more or less and then just experiment. For example, you could add -b 5000k to the command line to get more or less DVD video bitrate.
You need to specify a video codec. If you don't, ffmpeg will default to MPEG-1 which is quite old and does not provide near the amount of compression as MPEG-4 or H.264. If your ffmpeg version is built with libx264 support, you can specify -vcodec libx264 as part of the command line. Otherwise -vcodec mpeg4 will also do a better job than MPEG-1, but not as well as x264.
There are a lot of other advanced options that will help you squeeze out the best quality at the lowest bitrates. Take a look here for some examples.