Can't really help you with FME sorry. Stopped using that program months ago, never really had much luck with it. I currently use SCFH DFS with Xsplit.
Here's the quality I get:
http://www.twitch.tv/scottyyy/b/298908643
I'll try and do some settings for you. Try these out and see if it works for you, if you want to try without FME.
If you don't know how to get SCFH in Xsplit, just go to file - add camera. Then right click SCFH in the screen sources box and go to video capture format and change the resolution to your screen res and the framerate to 25. After you've done that you'll have to restart both programs to apply the settings.
In Xsplit do 960x540 (assuming you have a 1920x1080 screen resolution) and 25 fps. Make sure you lower the scale viewpoint to 10%. It's a low resolution but you can't use a high res with that upload speed unfortunately, even though your CPU can handle it.
Other things to note: having any sort of flash player open will destroy your stream fps. So don't watch your own stream to see if you're lagging, because you'll make yourself lag if you do that.
With the settings above you can adjust the bitrate to whatever you want. If you find you have a stable fps with those settings you can increase it to 800 or 900, but be aware this might make your ping go up in game. You just need to find the sweet spot for the bitrate based on your own internet. Also you can mess with the Xsplit preset too. ultrafast is good for lower resolution streams, but if you have very good fps you can try a slower setting to get more video quality.
edit: just checked your video and noticed it's 720p. You can really go that high with your upload speed unfortunately. Look at my video for example. That's 720p with 1300kbps bitrate and it's still blurry. You need about 2000-3000 bitrate to play an fps without it being blocky at 720p I'm afraid. Mine is just passable with my bitrate.