The shimmering you mentioned might well be in the source. I don't know if you can do anything about that. (As I said, videohelp.com might be the best place to ask about that.)
To inverse telecine, you will need the latest version of Avisynth, DGIndex, PGCDemux and I would recommend you try the TIVTC plugin first, which you should place in the plugins directory inside Avisynth. These are all free.
This is probably the easiest procedure to follow, if you haven't inverse telecined a video before.
- Demux your video with PGCdemux.
- Load the video file into DGIndex; check this option: Video --> Field Operation --> Honor Pulldown Flags, and save as d2v.
- Write an Avisynth script that looks like this:
Loadplugin("Your_Directory_Structure\DGDecode.dll")
Mpeg2Source("Your_Directory_Structure\Your_Video.d2v")
TFM(d2v="Your_Directory_Structure\Your_Video.d2v")
TDecimate()
You can skip loading the plugin if you put DGDecode.dll in your Avisynth plugins directory. Then open your script in HC Enc (0.25 is now out) and encode with pulldown flags.
You can experiment with the various options for TIVTC if you need to, but the default setting usually does a good job.