>>> [We casually overlook the fact that JPEG doesn't work in the RGB colour 
>>> space, it works in some weird custom space to better accomodate the 
>>> peculiarities of the human eye.
>>
>>   It's not a "custom space". It's the YCbCr color space, which has been
>> used in television and video for like 50 years.
>
> OK, I rephrase: It looks pretty exotic to me. ;-)

It's much better than RGB for two reasons.

1) The Y matches the high resolution bit of your eye, and the CbCr bits 
match the lower resolution color detector bits of your eye.  Thus they can 
be compressed different amounts.

2) Equal distances in the CbCr space give a roughly equal difference in 
colour perception.

If you tried to compress RGB channels separately the same amount as a YCbCr 
signal it would look much worse.

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