Picture breakup is not due to compression, neither is pixelization (assuming you mean seeing the great big square pixels = tiling). This is due to either noise in the underfunded distribution point, or RF intererence or an error on the hardware that pumps the feed.

But I've noticed that everybody's overcompressing video to try to cram more channels into their allocated bandwidth, and pushing it to the point that you can see the degradation. When ComCast switched from analog to digital, most pictures got worse because they overcompressed to wring the maximum revenue from the fixed bandwidth of their antiquated coaxial cable.

Everybody is overcompressing not so much to wring out revenue but because there is a limited number of frequencies that can be used. The customer wants more and more HD because the standard digital looks crappy on their brand new but cheaply made 50" LCD. An uncompressed HD channel takes up the same space as 12 or more standard digital channels. So the cable companies need to compress it, because their competitors - like Fios or DirecTV - can pump more HD channels than cable can. Why is this so? Because more than half the available spectrum for cable is tied up in sending out analog channels. And will be long after Feb 2009 because of FCC mandates.
Every Fios or satellite customer needs a digital box - so they don't need to be sending that ol' analog signal.
The compressions used by cable need to be better, I'd certainly agree.

only if the broadcasters and purveyors are willing to let HD be HD. Profits will tend to trump quality every time.

Physics and mandates play a significant role too. It doesn't cost any more to send out uncompressed HD than it does to send compressed.
The bandwidth just ain't there until the cable goes all digital.

Or the pipe dream that is Switched Digital Video comes to pass - but don't get me started on that. ;)