Thank you for the constructive criticism. You have inspired me to try out some things I've been kicking around. I have updated my script to 6.00. Turns out that I've nearly eliminated the problems you're showing with the Stormtroopers in smoke and the Rebel pic immediately following it, and it seems to have not hurt the stabilization too much! Please try it out and let me know what you think.
Well, I just spent some time testing the latest script with various clips. It's definitely an improvement in the smoky areas, bringing back detail. Compared to my previous encode with 5.02, the grain removal seems to be more subtle, but still a nice cleanup of the source.
After trying different settings back and forth and encoding clips both with Lagarith and then with HCenc, I ended up with a "less is more" approach to the settings. I went with the following alterations:
Levels(6,1.08,255,0,255)
Tweak(sat=1.06,hue=-2)
MT_MakeDiff(last,last.RemoveGrain(12,-1).RemoveGrain(12,-1))
With these settings in the v6.0 script, the overall look of the processed frame is quite close to the original with a tiny bit more contrast, minus the gate weave/wobble with reduced aliasing, grain and noise.
In my tests, a higher contrast (level setting) improved the depth, definition and perceived sharpness, but it was at the expense of highlighting the grain and noise. Various attempts to improve detail by changing the sharpness setting also had the same effect of making things worse. So, I went with a flatter, less contrasty image with less noise as compared to my previous full encode (and screenshots). In still frames, the result looks quite close to the original with a subtle bump in contrast and reduced grain. In motion, you see the other effects.
I'm running another full encode now and I think this will probably be what I stick with unless there are major issues when I play it back from disc.