[theora] blocky issue here with libtheora 1.1 20090806 (Thusnelda)

[Mysoogal]

this sample is very blocky, the older version seems to do much better 
and less blocky video. i'm not sure if my 1.9ghz 1 gb ram is the problem 
here or the encoder has hicups on this new libtheora 1.1 20090806 
(Thusnelda). please advice how to fix this or should i use the older 
version. this encode was 2 pass with horrible output.

http://www.megaupload.com/?d=NDGY0EAL

General
ID                               : 28168 (0x6E08)
Complete name                    : C:\Documents and 
Settings\Mysoogal\Desktop\bT\shutterisland-tlr1_h480p.ogv
Format                           : OGG
File size                        : 20.0 MiB
Duration                         : 2mn 30s
Overall bit rate                 : 1 116 Kbps
Writing application              : ffmpeg2theora-0.24+svn
SOURCE_OSHASH                    : 7c507450b2ea196d
SOURCE_OSHASH                    : 7c507450b2ea196d

Video
ID                               : 32697 (0x7FB9)
Format                           : Theora
Duration                         : 2mn 30s
Bit rate                         : 983 Kbps
Nominal bit rate                 : 990 Kbps
Width                            : 848 pixels
Height                           : 352 pixels
Display aspect ratio             : 2.409
Frame rate                       : 23.976 fps
Bits/(Pixel*Frame)               : 0.137
Writing library                  : Xiph.Org libtheora 1.1 20090806 
(Thusnelda)

Audio
ID                               : 21534 (0x541E)
Format                           : Vorbis
Format settings, Floor           : 1
Duration                         : 2mn 30s
Bit rate mode                    : Constant
Bit rate                         : 80.0 Kbps
Channel(s)                       : 2 channels
Sampling rate                    : 48.0 KHz
Stream size                      : 1.43 MiB (7%)
Writing library                  : libVorbis 20090709 (UTC 2009-07-09)