Text becomes pixellated and unreadable; 720 is somehow better than 1080?

[aadam]

So, I've been using Dxtory with the Lagarith Lossless Codec for some time now, and it's been working well, but I've been having an issue with text in games. I'm running all the games at 1920x1080, but I usually record in 1280x720. The text becomes pixellated, blurry and generally horrible looking, even before I go into editing. I've tried different codecs, and Lagarith still comes out the best, but it's still a problem. The weird thing is that when I try to record in 1920x1080, it actually looks WORSE than 720; the text is a lot less clear and the video itself tends to look fairly low quality. I'm currently using Gnomoria as an example but this happens with every game I've tried, including Kerbal Space Program. Just to show you what I mean:

How it looks as I'm playing:
How it looks on the 720p recording
How it looks on the 1080p recording:

I accept that there's always going to be SOME quality loss but it really seems like something's wrong here; anyone have any ideas about fixing it?

[ExKoder]

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http://forum.exkode.com/index.php?topic=2.0