Red Steel is a beautiful game. I'm talking graphics and gameplay here. It's fun to aim at people and kill them. Swordfighting is intuitive. Finally, the Japanese underworld theme is awesome.
Oh, regarding the reticule jumping around, I've noticed this as well. As far as I can tell, it jumps to the center of the screen automatically from time to time, but that's only half the story. It seems to happen when the game freezes for a split second (notice that everything around you stops as well).
So yeah. Not spotless, but certainly worth checking out.