Wow, lots of posts and theories! I have no theories to add, but I do have thoughts about the video tape.
Both of the hotels where I worked had video surveillance, with cameras at the entrance (s) and at the front desk, and neither used a digital system. One place recorded the feed and the other didn't. The place that recorded the feed had what two VCRs (essentially), and one would record until the tape ran out and then the other would take over. For those of you old enough to remember VHS tapes, you know that there is a a non-recordable section of tape at the beginning at end, which connects the video tape to the spool. Our tapes were made the same, so when the tape switched over, we'd miss 30-60 seconds of action.
We also reused our tapes. They were kept for a certain period of time (I want to say two weeks, but I can't quite remember), then they would be put back into circulation. In my youth, I was an avid tv recorder and had several dozen VHS tapes that I would use to record tv shows to watch later. You could set tapes to record SP (short play), LP (long play), or SLP (super long play). SP would get you about 2 hours of recording time and the quality would be very good. SLP would get you about 8 hours of recording time and the quality would be acceptable. If you frequently reused a tape to record SLP, over time you would get ghosting, which is remnants of your previous recording showing up on the new recording.
There was a similar situation with the tapes we used at the hotel. We were recording from static cameras that didn't move, so most of what we were recording just looked like a still picture. Over time, the tapes would degrade and there would be ghosting. I think that the reuse of tapes at SLP would, over time, create the strange movements people are seeing on the video.
As far as the blurred timestamp, I'm going to guess it's because of two reasons. One, if they are using an old system to record, that could cause the timestamp to be fuzzy and not work properly. Also, because the timestamp is always in the same spot, that could burn the image onto the tape, making things even worse. Two, since LE released the video to the public, I'm assuming they took the tape as evidence and copied that section of tape, which could have distorted the image even further.
In any case, this is simply an amateur analysis and I could be completely wrong about why the tape looks distorted.