I went through the options, and I don't see any change. Choosing static mesh makes the image bob. I wonder if my TV is trying to additional processing and causing problems?
Update:Choosing V/T de-interlance fixed the "twitching" issue. The 3:2 (2:2) Pull down option was causing it.
I played some shmups through the SOIA, and then from the Kramer FC-14 to my TV with BNC to RCA cables. The transcoder solution was definitely more responsive. I earned a higher score and survived for much longer. When I was using the transcoder to my TV I came across an option labeled "i/p conversion preference". When I set it to "quality", the image no longer bobs, but introduces artifacts with certain sprites. When set to "speed" I get 480i bobbing. Another added benefit to using just the FC-14 is that I also get sound.
The only image related issue that I am left with is difficult to explain. It is not screen tearing, and it isn't noise. Small rectangular portions of the image lose detail and shudder. This happens with the transcoder only solution, SOIA, and CSY clone combinations. The problem occurs on my Sony HX729, and my NEC LCD2490WUXI computer monitor. I think it is a PAL related issue, but I don't have a NTSC scart solution to compare it to. edit: The problems are not shown in the pictures I have taken. It wont show up in pictures.
Another update. FC-14 -> SOIA -> VGA -> SLG 3000. The colors on the VGA input were really muted, but after some adjustment, I got them to be a bit more vibrant. I also have to say that scan-lines are quite nice. The SOIA is a fantastic scaler. If I had a TV that virtually had no lag, I would stick with this solution.
I think that what I will do is start again with a NTSC American, or Japanese console, and see what happens with the picture quality.