What about the upside down m1v?
Are you still experiencing this problem in your encode?
I have recently seen this same problem myself.
I was explaining the basics of KDVD to a friend of mine when I saw the video coming out in an upside down encoded m2v (MPEG2 instead of your MPEG1).
I tried to narrow the problem down until I only had a few tools installed.
One of them was FFDShow.
Uninstalled it and suddenly avisynth started frame serving black video only with a red error message.
That's when I noticed XviD was not installed.
Yep, XviD, the codec that we all agreed not to speak of.
But that's the one we use to decode YV12!
I installed latest Koepi's XviD binaries (1.1.2 I think) and suddenly all problems disappeared.
So give it a try and see if you have FFDShow installed.
Cheers