Well, you're still compressing it to H.264 in the end, do you not? There will always be some banding. It's inherent in the format. For everyting else you might be overdoing that grain thing. Keep it subtle, but make sure that the noise specks actually have a certain size to them. It's that balance that makes the whoel thing work - the grains need to be subtle, but large enough to cause additional sub-blocks being produced in adjacent blocks. There's just no easy way to get perfect output with a specific setting...
It could also be your display. Your screenshot shows absolutely no branding to my eyes on a high quality monitor.
I also agree with Mylenium, H264 is going to throw artifacts into any video.
I guess it could be my display (im on my macbook pro), but it doesn't seem like a normal banding issue. I know to expect banding with H264 compression, but there is such a harsh contrast between the two shades. I drew a rectangle over the problem area.
In the meantime i'll try to adjust grain settings and see if I can come up with something that works.