Help & troubleshooting for channels on your Roku device, including adding/removing channels, logging in to, authenticating, or activating a channel, channel-specific playback issues, assistance contacting channel publishers to report issues, and adjusting channel-specific settings.
Do you mean it doesn't deinterlace or it doesn't play interlaced recordings at all? My Roku 3 plays my interlaced WTV (1080i) recordings (after repackaging into MKV) just fine. By the way, there's plenty of 720p OTA stuff available (I believe Fox and perhaps other networks use 720p for their OTA broadcasts).
I honestly can't tell the difference between the output from my WMC computer and my Roku 3 given the same recording and the same TV, so I'd have to disagree that it plays like garbage. Neither deinterlaces; it's up to the TV (and my eyeballs) to do that.
Try something with fast motion like sports. It's unbearable to watch. Everything I blurry and nauseating. Also, how are you streaming it? Via Plex? Plex or Emby with both deinterlace on the server side for you so the Roku doesnt have to. Problem is deinterlacing and reencoding sucks server cpu horsepower. Just let the Roku deinterlace like the device hardware allows it to.