Thanks for sharing the clip with us, Ady! Wonderful work as always, especially with the color correction.

In terms of the lightsaber retraction, I think there are two things that might be throwing off the viewer: 1) the blade is very close to camera, so it feels like it should move faster (especially since we're not seeing it from tip to hilt), and 2) when the retraction finishes, nothing happens. Something that might help is adding a brief lens flare/flash at the hilt when the retracting blade "hits" the hilt. Shortening the retraction by three frames and replacing it with three frames of flash may help it feel faster, as well as give a visual cue that the blade is being "snuffed out", albeit in a visually appealing way. Making the retraction sound effect a little louder may also help, given that it's happening in such close proximity to the camera, and therefore the viewer -- though it's possible VLC is re-mixing the audio in a different balance than you have it.

Ignition/retraction flares can be seen in the Lucas releases, so it's not unprecedented. I know they were definitely there in Episode III, though off the top of my head (and without bothering to check) I'm not sure about any of the others. As you know, lightsaber animation techniques vary wildly between the six films, so I think you have some license to do what you think looks right.

Hope this helps!