This paper introduces a video application-aware cross-layer framework for joint performance-energy optimization,considering the scenario of multiple users upstreaming real-time Motion JPEG2000 video streams to the access point of a WiFi wireless local area network and extends the PHY-MAC run-time cross-layer scheduling strategy that we introduced in (Mangharam et al., 2005; Pollin et al., 2005) to also consider congested network situations where video packets have to be dropped. We show that an optimal solution at PHY-MAC level can be highly suboptimal at application level, and then show that making the cross-layer framework application-aware through a prioritized dropping policy capitalizing on the inherent scalability of Motion JPEG2000 video streams leads to drastic average video quality improvements and inter-user quality variation reductions of as much as 10 dB PSNR, without affecting the overall energy consumption requirements.