Here is how I compressed this Giampaolo’s amazing video:
Premiere Elements Shadows/Highlights filter (enable remove flicker in clip’s field options)
Sometimes it is worth to add just little bit of sharpen filter too, but not in this case
Frameserve (Debugmode) video to VirtualDub to resize to 400×304 (multiple of 16) and convert sound to 22050Hz Mono
Mencoder to encode into H.264 at 650Kbps (gobs of settings in the bat file, also need MP4Box)
Served from Amazon S3 using this script (the script needs unique player names if you have more than one player on a page). GP also points out (thanks!) that you’d want to remove page breaks if you post it on Blogspot.