Hey guys I have a problem with the sound here..

The opening movie and flashbacks movies to Sora in KH1 have a sort of stutter to them. The sound breaks every couple of seconds and it's very annoying. It is running as an iso image, and not off the disk drive.

It is the same with speedhacks on or off, and at native setting or native x4.
The rest of the game runs at full 50fps (It is NTSC-J, but it feels full speed though for some reason. Definitely no slowdowns at 50fps, and it can go turbo to 100fps too.) at native x4 too, and I think the movies should consume less CPU/GPU power.

The only other problem is during voiced scenes with in-game sprites (not FMV like the opening movie) the dialogue is slightly out of sync. The character's mouth keeps moving for another second or two after he finishes talking.

Do I have a bad ISO?

You could try changing the interpolation in SPU2-X.
Also, change the Synchronizing mode to ASync Mix. Set the Output to XAudio2.

Hope that helps a bit

Enable VSync in Emulation Settings --> GS.