I've only seen this when I'm not getting enough bandwidth. You can always test out the web view internally on your network and see if it ever gets pixelated on your own network. This would rule out the internet connection if it does it then also. I've had this happen to me even with the mobile client, but usually it's a problem with the network or wireless connection. It has nothing to do with the camera as Milestone transcodes the video to try to optimize the video for the bandwidth the client has. I can dig around in my settings and see if there's anything else I can find, but you could always try changing the port and see if anything changes. Also, are you using HTTP or HTTPS? HTTPS will add some overhead as everything is encrypted, but it shouldn't slow down enough to notice I wouldn't think.
Michael