What do you mean by "muddier". I have done up to 6x4 mosaics and as long as there is sufficient overlap, I do the same as you i.e. creating frame pairs and then pairs of pairs etc. Have you enabled frame adaptation, 2-d surface spline and distortion correction in star alignment? You may have to increase iterations in distortion correction as you add frame pairs together.
Chris
ICE is great for Moon and Solar mosaics but PI beats it hands down for deep sky mosaics.