Due to mysteries of the universe, it matters not about Z order for videos. They will only be on top no matter what.
Don't re-encode the videos, they work fine in MaLa - it's your system. Do a search on MaLa xvid and you'll turn up heaps on videos not working, and what you can do about it.
In MaLa "Options » GUI » Options » Display Delay (scrolling)" set exceptions to snap and you'll have that snap in place while you scroll, and then the video when you stop.