Thanks!
Yes, all parameters are in a single string. The reason is that VirtualDub can only handle up to 10 parameters (I think... correct me if I'm wrong).
Smoothness range is -1 to 100000 (where -1 and 0 are special cases). The upper limit is arbitrarily chosen. (If you really want, you should be able to go higher if you do it from a script.)
The math.... is a secret
Well, not really. Without going into specifics I solve four huge equation systems (pan x, pan y, rotation and zoom) where I try to minimize both the motion curvature and the corrections at the same time. The smoothness values are weights that control which of those are more important to minimize. Higher values results in less curvature. I don't think this will help you a lot in choosing good values, but you asked.