I see on trac that the issue is still not resolved. I have a tidbit of new information for you. I notice similar pixelation with red colors in flash videos on sites like The Onion too. The problem is not as bad as in VLC with the Onion vidoes, but I assume it's because the videos are way more compressed overall so overall quality is lower.
Check out this video :
http://www.theonion.com/video/new-googl ... dir,17470/
0:08 the reporter's red tie
0:57 red rectangle on the very right hand of the screen
1:08 red phone icon on the handheld device
can you see the pixelation?
This is very odd. It must be something to do with either Nvidia drivers, or Windows 7 x64 ? Since we know the problem is not there in WMP, what could VLC and Adobe Flash player have in common?