Sequence Editor gamma distortion with Quicktime h264 codec

I’ve spent a rather frustrating month chasing down poor image quality in my simple vids made by trying to overlay and sequence short vids into a longer complex seqence. It turns out that sequencing in quicktime with the H264 codec is the cause of most of the problems:
http://img136.imageshack.us/img136/5310/seqtest01a.jpg
This image shows that simply saving/ sequencing an image in the sequencer in png format (with the default 90% image size) even 4 times successively does not seem to cause any distortion.

http://img404.imageshack.us/img404/2170/seqtest01.jpg
This image shows that applying the texture to a plane (shadeless) and rendering to png also doesn’t seem to produce any distortion.

http://img21.imageshack.us/img21/2271/seqtest02.jpg
However, as this image shows, saving as quicktime with the h264 codec ( Best quality) distorts the image. I expected some bluring, but as you can see in the right half of the image, the effect that is most disturbing when this operation is repeated 4x is bad distortion of gamma. :x
Do you think this is worth making a bug report??
My advise is that when compiling several vids in the sequencer you use the individual image strips rather than saved vids. I’ll see if I can work out the gamma correction factor.

i would really doubt that the h.264 codec messes up gamma. The second rendering looks an awful lot like specular glare…

Well the only thing I did was to take the mov file, import it into the sequence editor and sequence it as a mov file again 4 times in succession. This has happened when I tried to make side by side “ADD” effects using offset, when I did overlays with alpha images with gamma over/ under and, as shown here, when trying to build a vid by adding segments of previous vids in mov format.

Please let me know if I am doing something wrong, I am using the default settings for mov just using the h264 codec on best quality. I have not tried other codecs yet.

I have made the same experience, as do others i know.
And i am almost certain it’s the codecs fault because i have
witnessed that effect when compressing via Quicktime.
H264 just seem to apply some weird gamma correction.

But I´d be happy to be proven wrong and learn what to do better.