Encoding (video game) footage in weird conditions

[Velocity 7]

If you know what shmups (shoot-em-ups) are, consider a company's attempt at encoding video game footage into DVD:

1. Originally 4:3 ratio
2. Bob-deinterlaced and rotated 90 degrees counter-clockwise (for TATE shmups like Battle Garegga)
3. Resized to 240x320 (about... a little bigger and a bit weird)
4. Plopped on yet another 4:3 screen with stuff
5. The entire footage is encoded interlaced (!!!)

Now, how the hell do I deal with this sort of monster?

For a better explanation of the issue, what we have is this:
http://webhome.idirect.com/~tihhhuhv/before.jpg

Turned into this:
http://webhome.idirect.com/~tihhhuhv/after.jpg

Besides that, how about encoding the original into a good format (e.g., XviD, WMV9 VCM?)

[Backwoods]

LoadPlugIn("Decomb521.dll")
ImageSource("before.jpg")
ConvertToYUY2()
FieldDeInterlace(blend=false)
Lanczos4Resize(640,480)
TurnLeft()

Use that on your original source file, replacing "ImageSource("before.jpg")" with the correct information. Then you'll be good to go for your layer masking.

[Velocity 7]

That's not what I meant.

Oh well, forget about the "how to do original" part here, it probably would fit better in XviD forums.

On the other hand, how would I deal with the "after" video, where everything has been already done in the order I mentioned?