Yes, I have to agree that, for now, the simplest solution is, as you suggest, to revert to the older release of WMM. And curiously, the problem is not even in WMM itself, but in WDM. The later WMM is actually better in some senses; it is just that WDM misinterprets the improved pixel aspect ratio information. I wasn't aware of the 2.6 version or it's video overlay capability. Sounds useful.
I live in hope that MS employees read these threads and sometimes spot that someone has supplied them the information which will allow them to fix a problem easily; and that this will prompt them to take some action.
I have to agree that, in this case, the time elapsed since there was any change in this area suggests that the chances of this bug being fixed are low.
The most recent "change" here is probably the inability of Windows 8 users to even install WDM. One can only speculate as to reasons for this: loss of the developers, a desire to stop undercutting software vendors selling DVD mastering tools (or an arrangement reached with some of them), loss of some required components from Windows 8 (there are several things missing from Windows 8 that used to be in Windows 7). It's not obvious to me what could make MS drop an obviously useful program like this and so encourage users over to Mac.
Windows 8 rather saddens me: it used to be that successive releases of Windows removed bad aspects of older releases and added many improved features "under the hood", in addition to obvious foreground changes; this version has slashed away major functionality that users have come to depend on, and added a confusing alternative GUI suited to phones and tablets which is of no obvious use on a desktop computer. The resultant loss of sales is well-documented on the web. Removing the start button (or rather replacing it with the desktop-toggling button), and indeed removing any obvious way to find programs on your machine, just seems madness. And worse still, I know that technically Windows 8 has several major improvements in key subsystems; but these remain unavailable to me because I can't tolerate the GUI. Life's too short to waste on such a bad GUI for doing any serious work.