I have been doing a lot of compressing for the web recently. I started off very excited with H.264 because the resolution was very good for a web codec. But I did notice that the colors were off especially compared to the original, a compressed .mov or .mp4. I eventually gave up H.264 partly because of the wash out and partly because that Quicktime 6 users could not use it.

Anyways, it seems that wash out happened not because of the codec as much as it had to do with the Core Video feature built into Mac OS X. Specifically, it affects users who have calibrated their monitors. I did when I first got my LCD monitor. Core Video and H.264 for whatever reason don't like this and export with a little wash out. Rob Griffiths writing for Macworld had the solution: "Just create a new customized color profile using the Calibrate button and the Expert mode option." A simple solution to a convoluted problem.