IMovie export in 1080p shows nasty "jerky" artifacts - any idea why?

Basically everything looked great when previewing movie. When exported I got some artifacts. Watch the video below, pay attention to the top left area of the screen, especially when there is fast frame motion or between different scenes:
http://www.youtube.com/watch?v=3GyjZ8uPxy4
Anyone has any idea why?
If it helps, I am using a Summer 2011 MacBook Air - 2GB RAM, 64GB drive, iMovie project and files are stored on a USB-attached 256GB drive.

This issue hasn't been solved in over a year.
https://discussions.apple.com/thread/3235844?start=60&tstart=0
Basically it appears that the only real solutions are to use something else or downgrade to snow leapord.

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