Hey guys, much thanks for the replies.
@pdurrant: Yes I suppose that's what it's doing, as you say it is. That said the major degradation is between (after) ocr and the final product of optimization.
@ddharriman: 1. I am using Acrobat 8 Professional. 2. I have uploaded a screen capture of my settings, namely they are searchable image, english, and 600 dpi.
Reading the rest of your expemplary reply makes a lot of sense, I 've understood quite a few things. So, essentially if in ocr stage I choose 1,2 options and not 3 that will have an even worse impact in optimization (aka compression) since one layer of the document being a series of big images, optimizing them means degrading font quality. So I should rather aim for option 3 instead, sort out anything that was not recognized in the find suspect and then optimize (i.e. compress). (and then there's the reduced file size option which I have no idead what it does....) I have also attached the settings I use during optimization.