JPG snapshot after streaming has a very bad quality

JPG snapshots after streaming are very blocky, even though the stream itself is of very high quality. If I use PNG screenshots, everything is fine, but the file is way to big for my needs.

The command I used in linux for streaming:

/usr/bin/sudo -u vlc cvlc -d -R --rtsp-tcp --rtsp-caching=2000 --extraintf logger --logfile /var/log/camera1.log --scene-ratio=10 --scene-width=740 --scene-height=592 --scene-replace --scene-format=jpg --scene-prefix=camera2 --scene-path=/var/www/html/galati.ro/webcamx -vvv rtsp://Admin:123456@192.168.0.100:7070 --sout '#transcode{vcodec=h264,vb=3200,acodec=none,vfilter=scene}:std{access=http,mux=ffmpeg{mux=flv},dst=0.0.0.0:8091/stream.flv}'

I've also tried various encoders for the transcoding including WMV, MJPEG, etc... it doesn't seem to matter which encoder I use, the snapshot jpg quality is always the same: BAD !

I've attached both snapshots: the jpg snapshot which is very blocky and the png snapshot that has the exact same good quality as the stream itself.