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Real-time video communication over wireless multihop networks has gained significant interest in the last few years. In this paper, we focus our attentions on the problem of source coding and link adaptation for packetized video streaming in wireless multihop networks when network nodes are media-aware. We consider a system where source coding is employed at the video encoder by selecting the encoding mode of each individual macro-block, while error control is exercised through application-layer retransmissions at each media-aware network node. For this system model, the contribution of each communication link on the end-to-end video distortion is considered separately in order to achieve globally optimal source coding and ARQ error control. To reach the globally optimal solution, we formulate the problem of joint source and distributed error control (JSDEC) and devise a low-complexity solution algorithm based on dynamic programming. Extensive experiments have been carried out on the basis of H.264/AVC codec to demonstrate the effectiveness of the proposed algorithm over the existing joint source and channel coding (JSCC) algorithm in terms of PSNR perceived at the decoder under time-varying multihop wireless links.