I don't watch movies few feet away — I watch them closely to screen (LCD is safe for eyes, right?)
And if it's a still scene — yes, I will notice artifact. If it is not blurred image then I will able to see pixel aliasing too
I already wrote here somewhere that strong PSY-RD options produces more sharp image, but at cost of additional artifact-noise. I wonder what is better for a reference frame.
Imagine that you have "F" letter in a text string and after encoding it becoming "P" — what you prefer: slightly blurred "F", or a sharp "P"?