Adobe Media Encoder: introducing stairs (edge artifacts)

Question

Adobe Media Encoder: Is it fundamentally flawed?
When exporting Flash content to video, I noticed that Adobe Media Encoder introduces artifacts around edges that have a sharp contrast. The problem does not seem to be affected by bitrate or other settings and if I frameserve the video from Premiere out to a command line encoder, the problem does not occur, which leads me to believe that there is a big problem within Adobe Media Encoder. Most users may not notice/experience the problem if they are dealing with live action footage, but if your project contains animation (esp. Flash animation), it is a HUGE issue, if you are trying to maintain picture quality.
(Note: I've tried exporting on 3 separate hardware setups and I've even tried reverting to CS2 -> the problem exists in all of my tests)
Can someone else confirm the problem? (The problem is clearly there when exporting to MPEG2, Windows Media)
How to clearly recreate the problem
In Adobe Flash
Create a Flash project: 1280 x 720, 24fps, Stage Color: White
Create two symbols: - a red circle with a thin hairline black stroke
- a larger blue circle with a thicker black stroke
Create 2 layers on the timeline, place an instance of each symbol on the timeline on separate layers and create a motion tween for each symbol so that they move both horizontally and vertically across the screen.
Make the animation last at least 3-4 seconds and make sure the circles are not moving too fast.
Set opposite easing values for each circle (one with 100, the other with -100)
Export Movie... Bitmap Sequence...24 bit color, match screen.
In Premiere, create a new project:
Custom Settings:
Editing Mode: Desktop
Timebase: 24.00 frames/second
Frame Size: 1280 x720
Pixel Aspect Ratio: Square (1.0)
Fields: No Fields (Progressive Scan)
Display Format 24 fps Timecode
Import the bitmap sequence. Select the first file in the sequence and check Numbered Stills.
Place the Flash footage into a sequence.
Export...Adobe Media Encoder.
Try the following preset settings:
- MPEG2, HDTV 720p 24 High Quality
- Windows Media, HDTV 720p 24 High Quality
- Quicktime, HDTV 720p 24

Answer 1

Yeah, mp4 in HTML5 browsers is h.264 encoded - h.264 is a subset of MPEG-4 standard. More info here:
H.264/MPEG-4 AVC - Wikipedia, the free encyclopedia
For ease of use in AME, if you look at the right side of the UI in the presets, the Web Video > YouTube presets are the ones that will encode to h.264 with the mp4 extension.
hth,
Joe