Ok, I've watched it a few more times, specifically for the parts you mention as looking pixellated and mushy. And...yeah...it's there a little, but not to an extent that I thought was particularly noticeable or distracting as a viewer (I'm well aware of how the most minuscule thing can be huge if you're the creator; even tho' I love it to pieces, I still get frustrated over the mistakes in the window I made for my parents' bathroom) and only significantly visible when I maximized it to full-screen. Not to downplay that annoyance, but, for me, I'd far rather see a really well-done vid, where it's obvious a lot of thought has gone in to the music choice, the editing is tops, there's story or atmosphere to spare, with source smudginess than something with pristine, flawless source that's pedestrian, lacking even a basic understanding of editing principles, with a musical choice that makes me want to cry/sledgehammer someone. (God, especially the music choices! I'll spare you the rant on that one.)

One of the things that I love about the movie is that it is so very, well, French. That combination of passionate sincerity with a sort of faintly amused world-weariness is unique, particularly in an action-ish movie.