Thus in fact you reduce the quality down to a quarter of the possible quality.
Would you believe that one of the newest camcorders by Sony (other Sony camcorders and other brands are better) can record only 15 progressive frames per second in the "Progressive Mode"? There seem to be a ghosty unsharpness when something moves.
Another example: Imagine you have the following frame: Original frame This frame consists of: Blending would do this to them: Please note, that not only the area where the movement happened is changed thru blend, but also the green main body.
So interlacing is a way to display the nonmoving parts with full resolution and the moving parts with half resolution, but fluidly. But even as technology marches on and camcorders get better, you will want have 2 options: To record interlaced (= smoother motions) or non-interlaced (= higher vertical resolution).
It's a very clever way to cut bandwidth without sacrificing much quality. It is true that cinema movies are filmed with 24 noninterlaced (=progressive) frames per second (thus about 2/2.5 times less than PAL/NTSC) and look fluid, but this has a special reason: How many frames can the human eye see? This gives you good results, when there's no movement, but results in unnatural low quality movements.
If nothing changes from field to field then "Deinterlacing by Blending" gives you a slight blur.