I imported a character animated in Blender. It does not have too many polygons. It looks great inside the Unity interface. The problem is when I press play and use the Unity Remote application to run it on the iPhone the whole scene looks grainy and pixellated. I tried deleting the Blender object but even simple cubes with simple image maps on them look horrible on the iPhone device.
Don’t worry. What you’re seeing is a streamed copy of the editor window on your ipod screen, for the sole purpose of convenience.
Once you get it compiled and running on the device it’ll look much nicer.