I suppose very few people have ever looked as closely at Playstation 1 media as I have. Of those that have, I assume most worked for Sony, or developed games using the official SDK. Of the few that never got that approved proprietary insight, almost all are Japanese. Finally, of those even fewer remaining whose primary language is English, almost none care anymore at this late date. So I thought I'd take a moment and share some of what I've observed.
To my knowledge, only one game has actually used custom variable-length (i.e. huffman) codes in its video streams: Serial Experiments Lain. The infamous logo.iki sample may also use custom huffman codes (it sure doesn't use the standard ones), but until I find what game it's from I can't know for sure.
Now I assume S.E. Lain's use of custom variable-length codes means its video quality is higher than if the standard set was used, else why would they use it? Its custom decoding software also took full advantage of every last bit of space available to each frame. I've never seen games using the standard SDK decoder that pushed their buffer to the limit. And if that wasn't enough, it sacrificed as much audio quality as it could to increase space for video bandwidth.
I find this all terribly ironic because the quality of the game's artwork is downright awful.
So while S.E. Lain's video quality is pointlessly top-notch, its sound quality is not only bad, it is probably one of the worst. The audio was encoded very poorly, with many of the loud moments pointlessly sawed to half the dynamic range, creating excruciating distortions.
It's a crying shame, because even though everything about the game was different from the anime series, at least the audio contained more work by the original Lain voice actress, Kaori Shimizu.
Lain's video decoder also took a small speed hit because the data is stored as big-endian. This means that the little-endian Playstation platform has to take a moment to reverse every 32bit value read from memory. Who knows, maybe reversing it would have sped up the animation of Lain while drudgingly browsing all those media items.
The game that I've seen with the next best video quality trick is Alice In Cyber Land. It may be the only game that uses variable frame rates. During times with less video action, the frame rate could be dropped, giving the images more bandwidth for detail. When the action picked up again, the frame rate and quality could return to normal so the more rapid frame changes could be shown. I suspect any game's video could be modified to use this feature. In fact, it's really too bad that the official Sony SDK encoder didn't use this trick. So many game videos might have looked even nicer.
Meanwhile, on the good end of the audio quality spectrum, Square's (now SquareEnix) custom audio format provided the best audio experience of any games I've seen. Its unique format, used in several of their RPGs, produced almost twice the quality of the best standard SDK audio format. An entire sector was devoted to each left/right audio channel, and at intervals that resulted in nearly CD quality output.