It's actually called "ringing" and can easily be explained by the fact that you convolved with a box-function in the frequency space (ideal low pass), which will transform into a sinc function in the local space.
You can actually see it if you look closely -- there is a kind of striping of light/dark horizontal lines, easy to spot at the top & bottom of the image.
you can also try to apply a smoothening function: Usually multiplying by a gaussian in phase space will do, but this will cause your image to be blurred. What would be really impressive is if you could interpolate a pattern in the high frequency signal, and use it to "infer" values for your high frequency padding that "naturally cancel out" ringing to below the resolution of the imag.e
Here is the image interpolated 4X: http://imgur.com/a/8YrxG