Fun with VirtualDub

I've been toying with the recent version of VirtualDub today. I have managed to capture my Desktop at 30 FPS using a resolution of 768x576. Very nice. Perhaps cheap solution for tutorial videos. Have a look:

You are missing some Flash content that should appear here! Perhaps your browser cannot display it, or maybe it did not initialise correctly.

The Flash Movie has been re-encoded using Riva FLV Encoder 2.0. Bitrate was set to 1600 kbps - which produces a lot of artifacts as you can see. I've been using a motion jpeg codec for the live recording which looks just perfect. I wonder how to encode flash videos using h264, wasn't the latest Flash 9 update supposed to support that format?