Trying to enhance Flip Ultra Camcorder MP4. Need help.

[Nagashi]

I need help clearing up the fuzziness and colorful horizontal lines that my Flip Ultra (not HD) camcorder produces in it's MP4 video files. I know it's probably impossible to clear it up completely and make it look HD but I want to at least give it a try. So far, this is what my script is looking like:

ffmpegsource("C:\Users\Nagashi\Desktop\Project X\01.mp4")
FFT3DGPU(plane=4, sigma=0.1, sigma2=0.1, sigma3=2.0, sigma4=4.0)

This alone clears up a great deal of video compression artifacts, however, the colorful horizontal lines remain. Here is a sample video with a finger near the lens (it's easier to see the horizontal lines).

http://www.sendspace.com/file/74ntwz

File is 17 mb (640x480, 30 fps).

I want to do whatever I can to improve the video! Any help or suggestions would be greatly appreciated!

[jagabo]

Flaxen's VHS filter for VirtualDub can get rid of most of it:

[Nagashi]

Thx. I'll give it a try.