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Set your Playback Resolution to Full.
Thanks Colin. That definitely helped with the blocky, artifacty playback. But I still don't understand why there's so much rendering that needs to be done when mixing HD codecs. Since we frequently shoot DVCProHD on one unit and 5d or AVC-Intra on another unit and mix the formats in one project...I was hoping that the upgrade would minimize rendering for playback.
Ideally one shoot use identical cameras (or at least identical formats) for any given project. People often stray form that ideal scene, and some of those people are the ones having issues.
Like the old saw goes:
Man walks into a Doctor's office and says "Hey Doc, it hurts when I do this".
Doc says "So don't do that."
Yes, but unfortunatley Jim, sometimes production isn't always that tidy...and that's why Premiere CS5 was supposed to be the answer. Just like the doc's advise in the hilarious "joke" you quote doesn't cure the patient's ailment, neither it seems (at this point) does Premiere deliver what I thought it was supposed to.
It's very possible I missed it, mostly because I've never gone looking for it, but does Adobe advertise the ability to mix media formats in the same sequence?