Hey Chris,
All footage is being played off a USB 2.0 passport external drive. Do you think this is the problem? I will try to move it to a faster Hard Drive.
I will be printing to web, but I did a test-print to H.264 and MPEG-2 and the results are the same. The glitches/stuttering are actually worse when compressed. It looks like video card failing with green splotches and tracing where the stutters were.
Lastly – is there an easier way to convert everything outside compressor? Compressing all that footage will take hours and hours….. bummer.