We present a method for producing dense Active Appearance Models (AAMs), suitable for video-realistic synthesis. To this end we estimate a joint alignment of all training images using a set of pairwise registrations and ensure that these pairwise registrations are only calculated between similar images. This is achieved by defining a graph on the image set whose edge weights correspond to registration errors and computing a bounded diameter minimum spanning tree (BDMST). Dense optical flow is used to compute pairwise registration and we introduce a flow refinement method to align small scale texture. Once registration between training images has been established we propose a method to add vertices to the AAM in a way that minimises error between the observed flow fields and a flow field interpolated between the AAM mesh points. We demonstrate a significant improvement in model compactness using the proposed method and show it dealing with cases that are problematic for current state-of-the-art approaches.