This kind of not-quite-great playback does make you appreciate DVD and Blue-Ray as formats. If your DVD player did any of the above it would be "broken" and you'd take it back for a new one.
Somehow we put up with this sort of flaky behaviour from a multi-purpose tool like a PC.
I found out last night that when you buy the HD version of the show, you are allowed to download the SD version for free [by going to the iTunes store, choosing SD as the format, the "buy" button is a "download" button for every episode].
I experimented with one episode and the SD version looks fine so tonight we'll try that to see if the SD version plays better (mostly in regards to the panning choppiness).
I find it slightly funny iTunes won't just let you down convert the video, you have to actually download a new version from their server. Surely that costs them a lot of money? The answer is of course "because DRM".
I also think its funny I have three devices now (TV, DVD player, PVR) that play DivX, MPEG, XVid... a whole heap of formats they've managed to agree on a standard for, from USB keys, but none of them will play iTunes files. Again, of course, because DRM.
Infinite Sadness.