I love Pana lenses, I have the 7-14 and it's just awesome, really need to kill that sharpening ...

Thank you starstuff!

@stonebat - "I guess the body recognizes Lumix m43 lenses and applies some sort of sharpening."

I seriously doubt this is the case, as Panasonic would have spun it in promotional material as an exclusive advantage of Four Thirds system lenses. What seems more likely is that the Lumix lenses' clinical sharpness is due to their image-space telecentric design:

http://en.wikipedia.org/wiki/Telecentric_lens

Unlike film, which is flat and equally sensitive to light from all angles, the photo receptors in a CMOS image sensor are fabricated into cylindrical wells. As a result, oblique light rays may defract off the circular rims of the photo receptors and reduce the overall sharpness of the image. The design goal with a telecentric lens is to focus the light into rays that are parallel to the axis of the lens - and thus perpendicular to the image sensor - minimizing the defraction effect of oblique light rays.

Since legacy lenses were designed for film, they allow more oblique rays to strike the image sensor, particularly ultra-fast primes shot wide open. This produces an overall softening of the image which many of us prefer to the precise digital look of Lumix and Zuiko lenses. The drawback, however, is that legacy lenses are more susceptible to flare and reflections that bounce back into the lens off the image sensor itself. Panasonic's sensors are prone to blowing out highlights and uncontrolled lens flare can make this even worse.

While the digital image sharpening filter in the camera can make aliasing artifacts look worse, it cannot simply be "turned off". It is an integral part of the demosaic filter that converts the image sensor's Bayer RGBG array into RGB pixels:

http://en.wikipedia.org/wiki/Demosaicing

The reason a sharpening filter is necessary is because the RGB still-frame resolution of the camera is generated at the same high resolution as the photo receptor array. The native luminance resolution of the sensor is actually closer to the number of green photo receptors, which is only a quarter of the GH2's rated 16 megapixels. The mathematical interpolation used to calculate the RGB pixel values would produce overly-smoothed image details if sharpening were not used in the algorithm. While Panasonic has not disclosed the details of their proprietary demosaic algorithm, it no doubt uses edge detection techniques rather than straightforward unsharp masking.

OTOH, the GH2's Sharpness settings were optimized for high resolution JPEG still photography rather than HD video, and could probably be patched to lower values. However, this would not eliminate aliasing artifacts, it would only tone them down, along with genuine image details. The only way to reduce aliasing at the source is by lens and/or filter choice. Here again, the dilemma is the trade-off between excessive sharpness and susceptibility to lens flare. To my eyes, the modern aspherical lens designs used in contemporary Nikon, Samyang, Tokina, Sigma, and Tamron lenses produce more balanced results than either non-aspherical legacy primes or telecentric Lumix and Zuiko lenses. If they were more compatible with the GH2, I'd probably include modern Canon aspherical lenses as well.

@LPowell Thanks. I buy into your theory. You saying the design of m43 lenses gives the extra sharpness where the body processes indifferently. The telecentric m43 lens design makes sense to explain the more light reflection from the m43 sensor back to the lens.

@_gl - "Look at RAWs in eg. SilkyPix with sharpening disabled - they're much softer than what's coming out of video."

Agreed, but this ties into my point as well. RAW image processing apps like SilkyPix and Adobe Color Raw use their own internal demosaic algorithms to convert RAW RGBG data into RGB pixels. Similarly to the GH2, these apps provide controls that allow you to adjust the amount of image sharpening used in the demosaic algorithm. When you set sharpness to minimum with these apps, they will actually suppress genuine image details present in high-contrast edges. While this may well produce an image quality that you prefer, it is technically due to uncompensated low-pass filtering rather than turning an extraneous sharpening filter "off".

@_gl
The GH2 image sensor is always scanned progressively, in interlaced video modes as well. The interlacing must be done in a later step that no doubt applies additional filtering to convert the frames into a 50i or 60i stream. It's hard for me to evaluate, as interlacing looks like crap to my eyes, regardless of whether it's soft or sharp.

I think we agree on the value of lowering the '-2' sharpening limit in the film modes. Perhaps -4, -3, -2, -1, 0 would be a good range instead of the stock -2, -1, 0, 1, 2.

@LPowell LOL

Do anyone knows the status of work of cbrandin for the film modes?

>Do anyone knows the status of work of cbrandin for the film modes?

Work is going on.
Cris and I tried to change few curves found inside firmware.
Right now solution is not found.

I certainly agree there's something going on when using panny lenses. I'm not sure if it's a function along with the distortion correction, but non panasonic lenses that do not work with the electronic correction look reasonable to me.

GH2VK, Lumix 14mm 2.5, Standard film mode 0,-2, 0, -2. 16:9 aspect ratio. I took a photo with both JPEG and RAW enabled.

1st photo: JPEG straight out of GH2. This one has in-camera distortion correction.

2nd photo: RAW -> Picasa 3.8 -> Export to JPEG without any other modification. It looks wider and shows the distortion. I guess the "0" contrast and "0" saturation settings of the film mode didn't apply to the RAW.

3rd photo: Set both at black and white and did comparison. This is top right corner of the photos. 1st photo on the left.

The in-camera JPEG has less detail and less noise. I wouldn't worry about the -2 sharpness setting. But the -2 noise reduction doesn't seem like doing a good job. Or maybe that's just in-camera JPEG lossy conversion's limitation. But I wouldn't worry about it because @driftwood's high bitrate settings produce more fine noise.

The theory that the camera body applies more sharpness after distortion correction didn't seem right. I'm inclined to @LPowell's theory that images from Panasonic m43 lenses look sharper because of the design of m43 lenses.

@stonebat
Also it seems that Picasa cannot read GH2 rw2 correctly (hence the weird color and bars on the right side).
But yeah, lots of correction happening.