I tried out this way of cleaning up captured video on The Making of Slipstream VHS and the results are very good, I figured all I had to do was create the temporal smoothed reverse avi, then feed that (reversed so it's played forward) with the captured avi temporal smoothed into the avisynth merge script, this way only 3 copies of the video were made (source capture avi, reverse smoothed avi, final m2v output).

It's a technique I'm intending on using on any future VHS capturing because whilst there is a small amount of noticable temporal smoothing it looks a lot more like natural blur than temporal smoothing because it was smoothed backwards and forwards.