Its to late for your video format selection now. If you want something that will look good, your going to have to convert your video format. The 2 best options are DCDivx, and the Option to convert your Movies to DC Video (*.SFD) file to play like a normal Game Cynimatic.
To convert your movies to DC Movie files for normal play go here
http://internetconvoy.com/divx2sfd.htm
Note: I know it says DC Divx, but its not, the guy who put the page together made a mistake, becuase its not using the DIVX codec (aka. no divx quality)
The real DCDivx instructions here
http://www.dcemulation.com/soft-dcdivx.htm