Well.
I did watch V1 a while ago, and it was clearly sub-par compared to the R2 that I also have, video wise. But it all fell within what I guess could be considered acceptable for anime on dvd, circa 2001.
It wasn't a painful experience, but ADV's V1 was totally unusuable for screencaps. But I decided to keep my trap shut until V2, esp since an ADV rep claimed he'd look into it.
But V2 seems to be worse. I'm not sure what this is called, but whole areas of video around outlines pixellate and blink even when the outline itself isn't moving, in addition to outlines looking choppy. There's a fuzzy grainy texture that appears in some shots, but not consistently (ie, it's on Kaname, but absent in a quick shot of Kyouko.)
Every now and then, I see a shot that looks okay, good even, but they're always minimal-motion shots.
This is just on my new laptop, I haven't had access to my big tv in a while (longterm houseguest

), but this can't be limited to my set-up. I just watched V1 of Twelve Kingdoms, which was pretty damn gorgeous. And the GITS SAC dvds have looked good, too. (neither of which is an ADV release, I must note)
Fumo looked the worst in fullscreen, but playing it at normal size didn't clean up the way it looked
This may not be ADV's fault, and it might be something they can do nothing about, but I can still be mad at one of their reps who's attitude was 'It's good enough to enjoy it'. I'll still buy ADVs, but with reluctance.