Thanks for looking into that. It is edge halos (a quick google search confirms it).
I remember doing tests back when I got the deck and deciding to go with the R3. But it couldn't hurt to do more.
Here is a screencap without the R3
Here is a screencap with the R3
You can see that Digital R3 is not the cause of the halos, but it does enhance it. But it also works wonders for the rest of the image too. I think any sharpening done in Avisynth/Virtualdub would likely lead to the same results.
There is a Virtualdub filter out there called Exorcist that is supposed to help with edge halos but it can give mixed results. Not to mention destroy a little bit of detail in the process.
But to be honest I think that it would start to veer away from my originally stated goal of just making a simple preservation while implementing the most bare minimum enhancements.