The files themselves are Xvid with dual aac audio and both SRT and SSA format tracks embedded. While I might normally consider this an xvid problem, I often get varying containers with the same build of xvid used, and the avi containers display fine.
I run vlc 0.8.1 (sorry no build # on the info) for macos X (the downloadable binary) and am running a dual ppc g4 with os X.4.0 (tiger as sold on release day)
I'll attach a picture comparing VLC to mplayer to give you the general idea of what i'm talking about.. the distortion seems to be the same across all vids with the aspect ratio imaged here.
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