When I preview this the video quality is really bad, and I don't know of anyway to improve it. There is Camera.setQuality but it is only for use with flash media center.
import flash.media.Camera;
var cam = Camera.getCamera();
var video = new Video( );
video.attachCamera( cam );
addChild( video );
One way that you can "improve" your video is by setting the smoothing property to true for the video.
video.smoothing = true;
Also remember that there are a lot of factors that can affect the quality of the video. Connection, camera quality, bandwidth, computer processor and more.
I hope the smoothing property can help you some.