I think the picture will explain everything:
I zoomed in on a segment of the video. When I'm zoomed out a bit in after effects, you don't see it. I have the composition linked to a premiere pro project, and when I rendered the video out there, you can clearly see this tearing in the final render when its being played. The video was recorded on a Sony HD camera.
The raw video that I recorded was a .mts. I applied a warp stabilizer in Premiere Pro to the video and exported it as a .mpeg. The .mpeg is what I have in my After Effects composition. When playing the .mpeg with windows media player, there is no tearing. I tried rendering out the composition as a lossless .avi and there is still tearing. So...must be some kind of problem with the composition settings?