I've upgraded to the May 25 2005 CVS of XBMC 1.1 and although the picture is good, it still is "grainy" in comparison to XBMP...and to know I am not going crazy I put this on both my XBOXes, one connected via Madcatz s-video to a Toshiba 29" CRT TV, and the other connected via Madcatz Component to a Sony Wega 60" LCD...on both sets XBMP still looks "better".
And I am still looking into updating the xvid core, however I have run into problem procuring Visual Studio 7.0 (I have VS 6.0 and .NET 2003, its just 7.0 that I am missing, which is what XBMP was written in apparently).