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Well unfortunately Premiere 2.0 doesn't like the Camstudio lossless codec very much and presents a lot of artefacts making it unusable for editing in Premiere.
Vimeo on the other hand has no problem at all with it. The footage above is coming straight out of Camstudio.
Some people are recommending to use Microsoft Video1 set to 1 keyframe per frame. I will try this next time