The purpose of my comparison wasn't to compare the services to each other (YouTube is pretty dismal though), but to compare what can be done with your own hosting (and having full control over the video compression) vs. a service like Vimeo or YouTube.

I'm actually impressed a bit by Vimeo now. It seems they've improved their quality noticeably. A year or so ago, footage with as much motion in it, as the footage I posted, would have been pretty awful. I wonder if they've switched from VP6 to H264?

I don't like Vimeo purely because they charge you for the right to embed and then have the nerve to tell you how you can or cannot use your own PAID for embeds!

Vimeo's major problem is that it's policy about commercial use is so unclear. I was told that if I made a video for a company I would not be aloud to embed that video on the companies site. I can understand that view but why charge people for embeds that can only be used on facebook or myspace.

I was told that commercial use is unacceptable, however certain companies have "special agreements" with Vimeo that allow them certain commercial privileges. I was virtually hounded by Vimeo staff on their forum regarding this issue!

I'm sorry you had a bad experience.
I imagine that it is a difficult path for Vimeo to tread. To stop the site drowning in crap.