weird bash pipe behavior

[CptDpondo]

I'm trying to set up a pipe and it's not doing what I expect.

By way of background, I'm using mencoder to create a video file.
mencoder prints a status line every 0.1 seconds in the following
format:

Movie-Aspect is 1.33:1 - prescaling to correct movie aspect.
videocodec: libavcodec (704x464 fourcc=34504d46 [FMP4])
[mpeg2video @ 0x257e870]ac-tex damaged at 19 6
[mpeg2video @ 0x257e870]Warning MVs not available
[mpeg2video @ 0x257e870]concealing 1080 DC, 1080 AC, 1080 MV errors
Pos:   0.0s      1f ( 0%)  0.00fps Trem:   1min   0mb  A-V:0.000
[0:0]^MWriting header...
ODML: vprp aspect is 4:3.
Writing header...
ODML: vprp aspect is 4:3.
Pos:   0.0s      2f ( 0%)  0.00fps Trem:   1min  11mb  A-V:0.003
[0:0]^MPos:   0.1s      3f ( 0%)  0.00fps Trem:   1min  11mb  A-V:
0.007
[0:0]^MPos:   0.1s      4f ( 0%)  0.00fps Trem:   1min  12mb  A-V:
0.010
[0:0]^MPos:   0.1s      5f ( 0%)  0.00fps Trem:   1min  12mb  A-V:
0.013
[0:0]^MPos:   0.2s      6f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.017
[0:0]^MPos:   0.2s      7f ( 0%)  0.00fps Trem:   1min  12mb  A-V:
0.020
[0:0]^MPos:   0.2s      8f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.023
[0:0]^MPos:   0.3s      9f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.027
[0:0]^MPos:   0.3s     10f ( 0%)  0.00fps Trem:   2min  13mb  A-V:
0.030
[0:0]^MPos:   0.3s     11f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.033
[0:0]^MPos:   0.4s     12f ( 0%)  0.00fps Trem:   2min  13mb  A-V:
0.037
[0:0]^MPos:   0.4s     13f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.040
[0:0]^MPos:   0.4s     14f ( 0%)  0.00fps Trem:   2min  13mb  A-V:
0.043
[0:0]^MPos:   0.5s     15f ( 0%)  0.00fps Trem:   2min  13mb  A-V:
0.047
[0:0]^MPos:   0.5s     16f ( 0%)  0.00fps Trem:   2min  12mb  A-V:
0.050
[0:0]^MPos:   0.5s     17f ( 0%)  0.00fps Trem:   2min  13mb  A-V:
0.053
[0:181]^MPos:   0.6s     18f ( 0%)  0.00fps Trem:   2min  13mb
A-V:0.057 [0:180]^MPos:   0.6s     19f ( 0%)  0.00fps Trem:   2min
13mb  A-V:0.060 [0:180]^MPos:   0.6s     20f ( 0%)  0.00fps Trem:
2min  14mb  A-V:0.063 [0:180]^MPos:   0.7s     21f ( 0%)  0.00fps
Trem:   2min  15mb  A-V:0.067 [0:180]^MPos:   0.7s     22f ( 0%)
0.00fps Trem:   2min  15mb  A-V:0.070 [0:180]^M
Skipping frame!
Pos:   0.7s     23f ( 0%)  0.00fps Trem:   2min  15mb  A-V:0.040
[0:180]^MPos:   0.7s     24f ( 0%)  0.00fps Trem:   2min  16mb
A-V:0.043 [0:180]^MPos:   0.8s     25f ( 0%)  0.00fps Trem:   2min
17mb  A-V:0.047 [0:181]^MPos:   0.8s     26f ( 0%)  0.00fps Trem:
3min  19mb  A-V:0.050 [0:181]^MPos:   0.8s     27f ( 0%)  0.00fps
Trem:   3min  20mb  A-V:0.053 [0:181]^MPos:   0.9s     28f ( 0%)
0.00fps Trem:   3min  22mb  A-V:0.057 [0:181]^MPos:   0.9s     29f (
0%)  0.00fps Trem:   3min  23mb  A-V:0.060 [0:181]^MPos:   0.9s
30f
( 0%)  0.00fps Trem:   3min  26mb  A-V:0.063 [0:182]^MPos:   1.0s
31f ( 0%)  0.00fps Trem:   3min  30mb  A-V:0.067 [0:182]^MPos:
1.0s     32f ( 0%)  0.00fps Trem:   3min  32mb  A-V:0.070 [677:181]^M

Note that it's using \r instead of \n for line breaks; that's to
overwrite the status line without scrolling the screen.  this works
fine when displaying on a terminal.

I'm trying to reduce this to where it only prints the status line if
it gets a Skipped frame warning, so the above would look like this:

Pos:   0.7s     22f ( 0%) 0.00fps Trem:   2min  15mb  A-V:0.070
[0:180]
Skipping frame!
.....

To do this, I have the following pipeline:

mencoder .... 2>&1 | tr '\r' '\n' | grep -v -B 1 '^Pos'

this eventually creates the correct output, but it's buffered until
mencoder completes.  I have no idea why; the tr command streams
without buffering and I've used grep for years and never run into this
behavior.

If I output to a file, tr is correctly substituting a newline for the
return, and if I cat from the file grep behaves as one would assume -
the output is created as a stream and it doesn't wait until the file
closes.

Something with the pipe must be causing the buffering, but i have no
idea what it is.  I've tried various combinations of
sed -ue s/\r\n/g
sed -ue s/\r/\n\r/g
and assorted changes to the grep command, but nothing seems to work;
the output from grep is buffered until mencoder completes.

This is a problem in that excessive "Skipping frame" errors indicate a
problem with the mencoder command.  It can take 2 - 4 hours for
mencoder to get done, and I don't want to wait that long to find out I
need to change the command.