It is hard to say where the problems originate, I would think that being able to get a good jpg would mean a mjpg stream would be there too.
If all you are after is streaming this thread got me there. Guide to Setup Streaming Web Cam on the Yun - Arduino Yún - Arduino Forum
Motion has been a pet project for me getting ffmpeg is next. I think openwrt core people concentrate on router applications. This embedded system stuff isn't a itch they want to scratch.
Motion has some impressive capabilities but some cameras don't play well with it.