Wireless video communications promote promising opportunities involving commercial applications on a grand scale as well as highly specialized niche markets. In this regard, the design of efficient video coding systems, meeting such key requirements as low power, mobility and low complexity, is a challenging problem. The solution can be found in fundamental information theoretic results, which gave rise to the distributed video coding (DVC) paradigm, under which lightweight video encoding schemes can be engineered. This article presents a new hash-based DVC architecture incorporating a novel motion-compensated multi-hypothesis prediction technique. The presented method is able to adapt to the regional variations in temporal correlation in a frame. The proposed codec enables scalable Wyner-Ziv video coding and provides state-of-the-art distributed video compression performance. The key novelty of this article is the expansion of the application domain of DVC from conventional video material to medical imaging. Wireless capsule endoscopy in particular, which is essentially wireless video recording in a pill, is proven to be an important application field. The low complexity encoding characteristics, the ability of the novel motion-compensated multi-hypothesis prediction technique to adapt to regional degrees of temporal correlation (which is of crucial importance in the context of endoscopic video content), and the high compression performance make the proposed distributed video codec a strong candidate for future lightweight (medical) imaging applications.