i was wandering if anybody knows if it's possible to use 3rd party video compression software for flash 7+?

i have seen this video online, which plays in flash 7:

http://www.syzygy.de/default.aspx?menu=syzygy_home

i have tried every combination of flash 7/8/9 import techniques (streaming, sorenson, higher kbit/second rates etc) but i can't get the quality anything like it is in the site above. mine comes out really blocky, despite having a perfect mov/avi to import.

does anyone have any tips?