Its amazing what you can find on Google! I typed in "why is my blog banner blurry" and ended up finding a blog with great instructions for fixing my blurry header.
The instructions tell you to host your image on an image hosting web site, which did indeed do the trick. However, Blogger wouldn't even recognize the image link when I tried hosting the image on Flickr and Picassa kept on forcing my image to be smaller that I wanted it to be. I ended up using Imageshack as suggested by Southern Speakers. Worked like a charm! After hours of struggling to fix the *(@#$)! problem. Thank you Southern Speakers!