Here is the UPDATE to the video playback speed issue during the render queue recording.
We were experimenting with different settings and found the following WEIRD behavior:
Setting the “Compression Quality” higher than 90% starts rendering the nested videos at higher speeds.
Using AA settings in the Render Queue - also leads to speed up in videos playback. Also, in this case, if rendering to images - UE spits out all the extra samples per frame. So one doesn’t get an image per frame, but X images per frame where X is number of AA samples. I have no idea if it is done intentionally, or it’s a bug.