Hi,

O.k. over exposed clips are obviously bad, but can anyone suggest ways of removing the distraction, that the exposed elements of a clip cause on the viewers eye.

I've messed around with lumination, but not seeing much change, so not sure if doing it right, or if this is the right approacht to take.

I was once happy with a trick I tried, generally:

Copy the footage as a new layer, cc it so the overbright pixels are white and everything else is black, (levels effect, black point to 254 or so) then use that layer as a luma matte on another layer that is blurred to bleed surrounding colors into the overexposed portions of the image.

I dunno what software you have access to or how much time you're willing to spend on it, but this might help:

Making a quick matte with Roto Brush | Learn After Effects CS5 & CS5.5 | Adobe TV (http://tv.adobe.com/watch/learn-after-effects-cs5/making-a-quick-matte-with-roto-brush/)