I have exactly the same effect when I have shot in Frame mode. For me though it only appears on my PC (when editing using Pinnacle LE) but once I export it to DVD the footage looks great.

Rob, you said it might be something very wrong. If I sent it in for service, do you think Canon would be able to fix the problem?

Thanks,
Ian Hong

Ian: it looks like more people have encountered this, but not me.
I'm very very busy so can't check it out now. So in my initial
response I thought something was wrong. But it does not have
to be the camera.

But since some other people seem to have this to it might be
"normal". I don't know. I'm a bit out of options and suggestions.

Sorry.

I don't want to be responsible by extra costs for you when your
camera is working fine. You know what I mean?

Just to finish this thing up: Andre, I'm pretty sure you're right.
I got ahold of a Sony TRV-18 and shot in 60i, then deinterlaced in Vegas, and burned to a VideoCD. I popped it in my DVD player, and, sure enough there were the same "mouse teeth".

Thank you everyone, you've saved me some costly repair fees. :)
Ian Hong

Well Ian, not to make it more complicated, but creating progressive scan from an interlaced video can make this artifact , depending on the performance of the deinterlacer, even much more explicit than starting from framemode.

Yeah, I understand, thanks, I just thought it was something wrong with my GL2 that I would have to get repaired. I'm just relieved I don't have to send it in to Canon and pay to have it fixed when there's nothing to fix.