Any differences in Video8 workflow compared to Hi8?
 

My setup for capturing PAL Hi8 is:
Sony CCD-TR825E (TBC On) --S-Video--> ES15 --S-Video--> AVT-8710 --S-Video--> Pinnacle 710-USB --USB--> Windows XP/VirtualDub

Would I have to do anything different if I want to capture Video8? As far as I have read, I should still capture at 720x576 @ 25 fps. Anything else I'm missing?

You should always capture with basic components and add as necessary:
Sony CCD-TR825E (TBC On) --S-Video --> Pinnacle 710-USB --USB--> Windows XP/VirtualDub

Then fix accordingly based on the artifact you have whether it be frame or line errors. In your current setup you are doing 5 signal conversions:
Camcorder -- Analog --> Digital --> Analog --> Digital --> Analog --> Digital --> VirtualDub

V8 is no different from any other analog tape based format.

Thanks! I thought a frame TBC was deemed essential in every workflow, but I'll run a capture without it and see what happens! :)

Left without AVT-8710, right with AVT-8710:

Attachment 13347

The colors are more saturated, and I like that there is less black border

Attachment 13348

Here I actually prefer the colors with AVT-8710, as they're less overblown. There is slightly less visible with AVT-8710.

Attachment 13349

The big problem with capturing without AVT-8710, however, is that in some scenes, the video shifts up so much that it clips the top part. Is there any way to mitigate this?

Do you see the frame shift if connected directly to a flat panel TV, I know you can't see it with built in camera LCD screen or CRT TV because they have enormous amount of overscan.

No, the shifting doesn't happen if connected directly to a flat panel TV (it only has component input, but if I capture with component input, the shifting also happens, so I assume this to also hold for S-Video). I tried another Sony camcorder (CCD-TR820E) for which the shifting also happens, and a Canon camcorder that doesn't have line TBC, for which the shifting didn't happen.

I'm just gonna keep using the ES15 and AVT-8710, because then the image doesn't shift, the colors aren't oversaturated, and I do not notice and quality degradation due to all the conversions.