But compression looks so much better when it has decent source material to work with. It's the crappy noisy stuff it screws up on because it views the noise as detail and tries to preserve it, at the expense of details you do actually care about.

This is why movies still look really good even at surprisingly low bitrates (well one of the reasons, the other is of course unlimited time and lots of budget for tuning the compression which realtime applications don't have)