Don't worry about Windows Media Player, it's know to be incapable of playing videos exported from the RM at times, any other player (including YouTube) usually works just fine. As for playing the video in VLC, it looks just as high quality as anything else on your desktop (considering the uploaded video is only 720p). Try taking full quality screenshots of both, the video and the game itself, they should look almost the same quality-wise. If not, your only option would probably be to use a different encoding preset (e.g. the Custom Quality one) and configure the bitrate yourself (somewhere in the order of 10Mbits iirc. I might also be totally off, just try a few values).
