You are dealing with two issues... compression when you make the video and the recompression done by YouTube.

You can't do anything about YouTube's compression... it sucks, but you can sorta help it out by uploading the best quality movie you can make.

You don't need 40 Mbps, that's complete overkill. I always encode my videos with H.264 variable bit rate 10Mbps/15Mbps two-pass.

For H.264, encoding at the same bitrate for a 720P and a 1080P video will result in less quality(fuzziness, artifacting) for the 1080P clip.

Take a screenshot of your camtasia settings and post it up here.