HDMI workflow is not recommended for many reasons, It is not suitable for Rec. 601 SD video, you get baked in artifacts that you can never get rid off, Capturing lossless AVI 4:2:2 gives you a clean video to start with, whether editing, de-interlacing or simply encoding to a playable format.
Originally Posted by The_Outsider
Is that the weird 'shifting' seen in the faces, where parts of the head that I think should be moving are stationary but the eyes and mouth are moving, making it look like a cheap 70s-era cartoon?
Yep, Usually happens when capturing and encoding on the fly, to save the CPU resources it uses the lowest compression setting, This why high quality encoding is lower than the real time playback speed, few frames a second.