Yes that is certainly frustrating. What that is showing is that the cheapo digital converter has a better tuner than the Panasonic. I would really go after Panasonic. If its still within the return period, i would return it and try an LG or Samsung or other brand.
There is a possibility that the tv tuner is overloaded but then again you should be receiving the weaker stations.

You dont mention where you are located... I assume you are in Buffalo. Can you get CH23 CW from Grand Island. It is the easiest for me to get all the way from Toronto with a simple non-amplified antenna.