Yeah that is interlacing. The artifacts are called combs.
CCCP has a deinterlace filter (and I think a decomb as well) in FFDshow (the little icons that appear in your system tray, probably coloured black and the other blue (blue is audio)). As usual though if you can clear it up at the encoding stage then you will get less CPU load and/or better quality than real time if you do it correctly.
Deinterlacing can be done in several ways:
reduceby2 or variant thereof: every other line is interlaced, kill every other line and you win. Fast and reasonable quality (ghosting can occur but it does not matter so much).
field blend: (what Vdub calls the "best" if am not mistaken, it works and does it well but I think better quality can be had and modern CPUs tend to make any time difference drop). Interlaced frames split a video into two "fields" and then play the back (which made life easy for older TVs, see my is high def any good thread if you are curious for more links and whatnot:
http://gbatemp.net/index.php?showtopic=73993&hl= ) meaning you can surely stitch them back together. You can but it is not flawless.
bob: probably the most common of the high end stuff. The nice thing about video is that one frame is similar to next for the most part and so is the section/pixel immediately above (and to the side). This means you can extrapolate an image by shifting pixels around. The work in different ways (some use each field to make a frame: doubling framerate or halving speed while others drop fields)
A subsection of these are called smart bob(bers) which attempt to find the combs and sort them, runs into problems with horizontal lines (anime and cartoons mainly although normal video is not exempt) though which can make things look a bit odd (or leave them in if it is not strong enough).
Naturally there are 4000 odd implementations for each of them with some focusing on speed and others on quality and others on accuracy (apparently there is a difference).
In my opinion the most agreeable (best tradeoff for time and quality) deinterlacing is achieved with avisynth and bob deinterlacing. DGBob (you may well have been to his site for vdub filters
http://neuron2.net/dgbob/dgbob.html ) is my general purpose filter of choice but if you look through the avisynth section of doom9.net forums you are bound to find many filters based around really nasty maths and psychology that can do the job far better (although I warn you they occasionally lack optimisation so be prepared to return to 9 hour encodes).
Sidenote you probably also want to look up inverse telecine aka IVTC, simply put video form a standard video recorder/film camera appears at 24 frames per second or thereabouts. PAL video is 25 and NTSC is 30 fps.
PAL tend to speed things up (although it is not definite) and NTSC replay certain frames (that should be fields really), link and also check out the main doom9.org site
http://www.dvdfile.com/news/special_report..._2_pulldown.htm
It is not that simple though as CGI (the are others but CGI is the main one) tends to be pure 30fps though and so does not need this, some DVDs have flags to do pulldowns while being played back (your rip on the other hand can choose), other DVDs do very odd pulldowns (incompetence usually bears the blame here unless you are dealing with very odd/old video).
