I've found much the same results with auto-brightness (brightness=255)
and xfqcam 1.02 - lots of brightness flicker. It is useful, though,
because brightness seems to be set correctly regardless of what the
other two values are. So, to get your picture looking good...
First set the brightness to 255. Ignore the load-induced flickering.
Set white balance so the picture looks good.
Adjust contrast so the picture looks better.
Go back and set brightness by hand until it looks right.
Basically, autobrightness allows you to get the settings right one
dimension at a time, instead of having to futz with all three values
simultaneously. A program that tried to adaptively set the levels
would be fun to try to write - any image processing experts out there?