IPad 2 Video playback Quality Issue (Low Contrast and grayish black)

Does anyone notice that the video playback quality is really bad on the iPad 2? If you try to play any video (youtube, apple trailer, your own converted video) on the iPad 2, any black images will turn grayish... Just put your iPhone, iPod touch, or even the older iPad next to it, then you will notice a BIG difference. The color is similar to what happened when you set the gamma incorrectly on a display.
Also, you will notice this more if you change the orientation of the device, the contrast will be corrected for a fraction of a second.
I've tried this on other iPad 2 and they all share the same problem. I tried to talk to the Apple Genius Bar and they refused to give me a proper answer on this, instead simply claiming that is just the way it is... I wanted to refund this but I've passed the 14 days rule and also I got it from a authorized retailer and so Apple just won't take it back.
I believe it can be fixed by software... Any idea? or I shall throw it away T_T

I'm on the phone with apple support right now. I work at a post production house, and we/our clients keep having this issue - everything looks great on screen and on the ipad 1, and theres a huge gamma shift on the ipad 2. they need to fix this ASAP. like Jls21 already said, a lot of us use ipads for work purposes - unacceptable!
this thread ( https://discussions.apple.com/message/15100980#15100980 ) seems to blame the h.264 codec/compression settings…? does anyone know of another codec that prevents this gamma shift on the ipad 2?
this is from the tech specs page:
Video formats supported: H.264 video up to 720p, 30 frames per second, Main Profile level 3.1 with AAC-LC audio up to 160 Kbps, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats; MPEG-4 video, up to 2.5 Mbps, 640 by 480 pixels, 30 frames per second, Simple Profile with AAC-LC audio up to 160 Kbps per channel, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats; Motion JPEG (M-JPEG) up to 35 Mbps, 1280 by 720 pixels, 30 frames per second, audio in ulaw, PCM stereo audio in .avi file format
is there anything that jumps out to anyone regarding workarounds for this issue?
we've used both Compressor and MPEG Streamclip - there's no quality difference between them, in case anyone is trying that.
okay so, i was transferred to a senior technical rep and he looked it up - apparently apple is getting a bunch of complaints about this issue and they've submitted it to their developers. the more people that call and complain, the higher up on the priority list it goes to be fixed in a software update. there is no workaround known, and it's a standard issue across all ipad 2's.

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