1. A computer-implemented method for transforming a block of pixels within a frame of a digitized video image using a selectable one of a set of transform functions, each transform function having an inverse transform function, and each block having a predetermined set of image characteristics, the method comprising the steps of: associating the transform functions with the set of image characteristics, with predetermined quantization values, and with adjustable thresholds associated with the image characteristics; obtaining respective characteristic values for the image characteristics of a block; selecting a transform function from the set of transform functions based on comparisons between said characteristic values and said adjustable thresholds; applying said transform function to the block to form a transformed block; quantizing said transformed block using a quantization value to form a quantized block; selecting an inverse transform function whose application minimally covers said quantized block; inversely quantizing said quantized block to form an inversely quantized block; applying said inverse transform function to said inversely quantized block to form a decoded block; obtaining a quality value for said decoded block by obtaining a peak signal-to-noise ratio for said decoded block; updating said adjustable thresholds based on said quality value and said characteristic values; establishing histograms of characteristic values for each of the image characteristics and associated transform functions and quantization values; recording said characteristic values in histograms referenced by said transform function and said quantization value; selecting a statistical function to apply to said histograms; applying said statistical function to said histograms; and updating said adjustable thresholds with data from application of said statistical function to said histograms by selecting an order statistic based on the quality value, transform function, and quantizer value; applying said order statistic to said histograms to obtain new thresholds; and updating said adjustable thresholds with said new thresholds.