Picasa appears to use system codecs, based on
this. Meaning horrible support for MPEG standards unless the user has either installed Quicktime, or is running on Windows 7.
Actually, I am running Windows 7

I just upgraded from the 7000 build to the 7100 RC build last night.
How does that change things?
*edit*
Actually, I'm still interested in knowing, but I won't be playing this slideshow on any Windows 7 boxes, so I guess I'll have to figure something out. If any of you were just looking to deinterlace a video, what tool would you use?