SD picture quality is sub-par on my 42" LCD as well, but expected the Plasma to fare better on SD signals.
No...the degradation in SD quality is not due to extra length. If the signal is poor, the STB wont lock in worst case and causes intermittent freezing and dropping of frames, but not degraded picture quality. The degraded picture quality is purely thanks to the higher than normal compression used by TS to accommodate more channels into the transport stream.
The HD channels are a lot better, but not as good as the HD transmissions qualities abroad. I use the same TV in India which I used to use abroad and can confirm that what is dished out as HD by TataSky leaves a lot to be desired in terms of picture quality. Download a 1080i HDTV rip of some NGHD program from the internet, play it through your media player and compare it to the so-called NG-HD channel in TataSky and you will understand the huge difference in quality.