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If you'd looked at the site, the authors actually do the exact comparison you suggest: http://research.microsoft.com/en-us/um/redmond/projects/hype... It's better than a raw timelapse, but not (IMHO) nearly as good as their results.

From the paper intro:

    Video stabilization algorithms could conceivably help create smoother
    hyper-lapse videos. Although there has been significant recent
    progress in video stabilization techniques (see Section 2),they do not
    perform well on casually captured hyper-lapse videos. The dramatically
    increased camera shake makes it difficult to track the motion between
    successive frames. Also, since all methods operate on a
    single-frame-in-single-frame-out basis, they would require dramatic
    amounts of cropping. Applying the video stabilization before
    decimating frames also does not work because the methods use
    relatively short time windows, so the amount of smoothing is
    insufficient to achieve smooth hyper-lapse results.
And later on (section 7.1):

    As mentioned in our introduction, we also experimented with
    traditional video stabilization techniques, applying the stabilization
    both before and after the naive time-lapse frame decimation step. We
    tried several available algorithms, including the Warp Stabilizer in
    Adobe After Effects, Deshaker 1, and the Bundled Camera Paths method
    [Liu et al. 2013]. We found that they all produced very similar
    looking results and that neither variant (stabilizing before or after
    decimation) worked well, as demonstrated in our supplementary
    material. We also tried a more sophisticated temporal coarse-to-fine
    stabilization technique that stabilized the original video, then
    subsampled the frames in time by a small amount, and then repeated
    this process until the desired video length was reached. While this
    approach worked better than the previous two approaches (see the
    video), it still did not produce as smooth a path as the new technique
    developed in this paper, and significant distortion and wobble
    artifacts accumulated due to the repeated application of
    stabilization.



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