First off, you should NOT be getting all this pixilization whether it be a 20" or 110" TV's your watching on! It sounds to me like you got a bad install/equipment. What kind of signal strength are you getting. It should be over 100 (on a clear day) on transponder 11 if it was done correctly. I can see some problems with locals only, which is casued usually be caused by problems with the signals they are getting locally before uplinking to their system but will usually clear up over time as they get fiber feeds done for those locals. But since you say the pixilization occurs on other channes like movie channels there is definately something wrong. Did the retailer send someone out to check the install to see why you are having problems? You mention he says he sees that problem alot which leads me to beleive this retailer is a goof that doesn't know how to properly install satellite systems!
And as for the cancellation... if you signed nothing they can't do anything! Plain and simple, you agreed to nothing without signing a contract. In the end the retailer is going to get screwed!
Received email from Netflix about household sharing