This is caused by either a) hardware MPE/GPU-accelerated rendering (which you don't appear to be using, since your sequence is red bar), or b) using Maximum Render Quality on export. In either case, rendering is done in 32-bit floating point linear color; instead of the smooth, logarithmic curve you're accustomed to seeing when you create an opacity ramp or use a cross dissolve transition, you have a linear opacity ramp that changes in even increments. This can result in some rather jarring dissolves, despite linear color being more "technically" correct, as it's how light works in the real world. Personally, I prefer "aesthetically" correct--so do my clients.
The solution is to not use Maximum Render Quality on export, or if you were using GPU accelerated rendering, to disable it when it came time for export. Unfortunately, when you do either of those, you lose all benefits of those settings, and not just the 32-bit linear color rendering.
If the mood strikes you, please file a feature request for Adobe to consider a more flexible and client-friendly way to select this particular setting: Adobe Feature Request/Bug Report Form
Thanks for the reply!
I already knew about linear workflow, having seen it in other software, but I did not know it made its way in Premiere Pro. Looks like I have a few interresting reads up ahead.
You're welcome, and thanks for taking it well This doesn't make some folks (me included) that happy.
Here are some more details about MPE in its various flavors and effects within Premiere Pro CS5 and beyond:
None of those are specific to this issue, but there are some interesting techincal nuggets in there that might be illuminating.