iTunes 10 doesn't smooth video anymore when Viewed in a separate Window

iTunes 10 has introduced borderless video viewing like quicktime X did.

Unfortunately when watching a TV show or Movie, bigger than its actual size in this separate window, the video now appears blocky, except when you hover your cursor over the window.

Cursor over video (or paused) video is smoothed (anti aliased)

Cursor moved away is blocky.

I've tried this on 2 Unibody Macbook Pro's and the same thing happens on both. Anybody else having this problem?