As I understand it the High Frequency is the part of the image that deals with edges which give the detail. Is this true? If so then that might be why the blue-screen problems.
Does this capture mode have any effect on CC ability? Would it help the image not fall apart so fast?

Yes detail is carried by high frequency information. That is always compressed in video system based on the human visual model. We can see low frequency quantization easier than high frequency quantization. This is how all human modelled compression works from DV to MP3. A visually lossless compression can reduce the bit-rate by compressing the elements you cannot see. Uncompressed HD is around 100MBytes/s, CineForm compression is around 12-14MBytes/s -- it looks the same, but of course mathematically it isn't. There are plenty of books on this subject -- just type "video compression" into the search field on Amazon.com.

Blue-screening is a little more difficult for any compression system as it does not follow human visual models -- it is not the human eye that is doing the key, it is some third party mathematically model. So this very much depends on the logic of the key. Use a good keyer on a compressed source and it will work great (rememeber most sources are compressed in some form.) We re-did some tests after this thread and found chroma-keying of our sources works fine on a good keyer. We have many customers using CineForm compression of compositing work. Unfortunately I haven't yet received sample data from this particular customer to see if anything can be done to improve the situation (I hope that happens.) As you quoted, we have a mathematically lossless transform, so we can adjust to store any sequence.

> Does this capture mode have any effect on CC ability?

CC = Color Correction? Yes the codec is very good at color correction and preserving the quality over generations. Using "Large" capture mode versus medium has not much impact on color correction.

> Would it help the image not fall apart so fast?

The whole point of CineForm compression is to greatly reduce multi-generational losses. You can see this analysed here : http://www.cineform.com/technology/quality.htm