I think you hit the nail on the head on this.
And on one thing you noticed, it is a weird phenomenon where the wide shots look more fuzzy/vhs-ee and the closer stuff is more in acceptable territory (from the perspective of DVD-like quality).
But, I would much more prefer that contrast than lowering the quality on close/medium shots. In fact, as I recall now pneumatic made one artistic decision to go for a more universal look, and actually did try to make it more consistent. Or, maybe that was between episodes rather than shots?
Another thing I am noticing, is that at least on my tv, playing off a USB connected to theTV vs. a PC connected to the tv with a USB cord may make a difference.
When it's connected via a PC to tv, the TV has a "PC Mode" option that comes up (standard, movie, custom, pc). I think the PC Mode somoething with the gamma colors, or maybe just how it handles or processes closes, or maybe some lines of resolution thing... there's something about it that elevates the color in a more semi-vibrant, real-life way than the darker look we otherwise get. I guess on PC mode it's also using VLC player but VLC player on its own doesn't do this.
The old samples of Topaz, which I will compare this weekend, to the new stuff, my memory has them looking a better color-wise and so I want to next check out pneumatic playing off the laptop-connected-to-tv to see how it plays.
Perhaps similar to what you are saying here:
Another feature of the player and the TV: my blu-ray player seems to amp up the saturation levels for standard definition content and my TV's energy saver settings (which I use to watch SD content on low backlight) also have increased saturation. This filled in the colour that seems to be missing from the blu-ray files, so the Turbine video image seems reasonably colourful when the files themselves look really washed out.
I'm convinced that, in addition to the upres your blu-ray seems to be able to do on turbine, along with capturing the coloring that specific VLC settings (which i've posted here in the past) plus gamma/pc mode changes could probably push everything even further. To more the "ultimate" version. At least with current technologies. I have not been able to achieve the color quality of PC mode with just adjusting VLC settings alone.
I also have a hunch with your blu-ray player that the upscale algorithm is either really f'cken good OR it's really simple and basic (e.g. way simpler approach than topaz), and that simple/basic formula works well on Turbine. I also have a hunch that maybe that your blu-ray player won't do upscaling on content in the same way unless it reaches a certain level of poor? Maybe it doesn't reach that treshshold algorithmically with Universal, but some logic kicks in with Turbine (that may not be triggered with Mill Creek, or it is but Mill Creek source doesn't upscale well with it's algorithm). I don't know, just throwing out guesses.
One thing that is nice about Pneumatic edition is, I dont think I've ever seen the S1 lettering so sharp on an HD tv. It's a jarring pleasant surprise to see clean lettering. And less wobbling on that initial wide shot of the street from the King is Back episode.