That's interesting.
This is exactly what I was saying about DVDs when they first came out. There was horrendous artifacing and pixelation whenever there was a rapid change of lighting, an explosion, or any sort of rapid movement.
Eventually, the encoding got better and the image quality improved significantly.
I'm no longer pining for the days of laserdiscs and I'm okay with DVDs.
What I've seen of Bluray looks really good.