hmm As far as I can see, with interlaced mode, as it takes 2 passes to fill the screen, it effectivley halves your refresh rate. Hence the flickering.
Graphics on a normal TV boardcasts also has this horizontal shimmering as it is interlaced.
I love interlaced modes because of the picture quality, and even the DBLPAL/NTSC aren't quite as good. Trouble is that I hate the flickering :-(