Joph:

This is a known (and widely discussed I think more in the youtube plugin) issue.

What happens : indeed you are right. Mplayer has 2 modes, the default (when you play on it) and the embedded mode, like canola (we ask mplayer, to play the video on our window)

But due to existing bugs, the playback and stretch only happens on the embedded mode not on the player mode. So you get less performance, and the dreaded stretch.

We already helped with the bug fix to mplayer code to this stretch issue, and it's funny but I have some devices now that do not stretch and others that do (I don't know if .27 is already with the patch, but if its not streatching for me... it's because the patch is probably there) .

So, In the end :

We are not able to "fix" those things in Canola. It's mplayer embedded mode. What we can do : help them, as we are trying to do when possible, and expecting a new release to come better.

how to workaround this :
a. for youtube playback there will be now way
b. for local video playbacks, try using lower quality encodings. The best ones that plays on the default mplayer will not play embedded.
c. If this goes lower than your expectations, you can change the video player back to the default maemo player, by editing the atabake config file (put this on the search and you will be taken to the thread teaching this)

BR