Just been experimenting, and found that if you get the flv and bring it into MediaCoder:
* under "Picture" tick "resize", and dropdown to 128x96. If you hit the "resize" button, it will pop up a window, and you can check under "scale algorythm" what type of algorythm you want. Bicubic seems good, though there might be something better.
* Maybe tick on the "aspect ratio" => "4/3" just to be sure.
* Under "Video", boost up the bitrate as high as you want.
The end result is an avi that, when fed into the amv converter, gives a MUCH better result than feeding it in at 320x240. So flv DOES seem to be able to give a very nice result, if processed correctly, no need to download the much larger source avi/mpg.
PS. I just found that 128x96 plays nicely on my player, the extra space top and bottom is filled with a black background, so no need to letterbox to 128x128. And much smaller filesize.
Your results may vary.