I was getting a very similar image from the ScriptInstinsicBlur in my application. It took a while to figure this out but it turns out that the MediaMetadataRetiever getFrameAt methods return a Bitmap config that is RGB_565. Applying the blur in renderscript gives you the funky results because it apparently doesn't work on 565 pixels.
Converting my Bitmap to a ARGB_8888 and then handing it to the renderscript gave me the blur I was looking for.
Hopefully this helps someone else.
This is the method I found to convert it. (It's from a SO post I don't have bookmarked)
private Bitmap RGB565toARGB888(Bitmap img) {
int numPixels = img.getWidth()* img.getHeight();
int[] pixels = new int[numPixels];
//Get JPEG pixels. Each int is the color values for one pixel.
img.getPixels(pixels, 0, img.getWidth(), 0, 0, img.getWidth(), img.getHeight());
//Create a Bitmap of the appropriate format.
Bitmap result = Bitmap.createBitmap(img.getWidth(), img.getHeight(), Bitmap.Config.ARGB_8888);
//Set RGB pixels.
result.setPixels(pixels, 0, result.getWidth(), 0, 0, result.getWidth(), result.getHeight());
return result;
}