I followed all the steps from ADigitalMan's guide except the part where it shows how to crop a letterboxed video: I don't want to to that just yet.
Now, the small preview clip I did seems inexplicably fine: the aspect ratio is okay, it plays well in both WMP and Vegas, but the image has a slight blur which occured after the inverse telecine process I think. Basically, the screenshot is very representative of the clip: perfect except the blur.
Here is the avs, don't know if it will help.
http://rapidshare.com/files/145900158/telecine_step2.avs.html