Xenosaga ep. 1 has slowdowns on AGWS fights, but plays at perfect 60fps otherwise?

[pandubz]

I ran some tests and found that while Xenosaga is indeed conventionally very CPU bottlenecked and light on your GPU, using an AGWS unit will substantially reverse that. For each AGWS unit (tested up to two) placed on the field, the performance drops substantially. With my framelimiter disabled, my standard speed of ~500% on Preset 3 + 8x Native resolution dropped to ~250% with a single AGWS unit on the field, and down to ~125% with two AGWS units.

Curiously, I re-ran this test at Native resolution and found no change in performance; this suggests it is not the level of detail in the draws at the PC level, but the game's internal render strategy and perhaps the volume of draw calls it is sending are too much for the fixed unit to handle. Rather interestingly, switching to software rendering then blasts back up to 300%. Though I am not 100% sure what impact it has on the performance, it is worth noting that part of Xenosaga's render strategy is it only draws a frame once every other vsync, it is not a 60 FPS game.

I wrote a pretty extensive test of Xenosaga Episode 3. I went on to play Episode 1 as well, but I didn't write down and post my results here, but pretty similar settings seemed to work. I have a Ryzen 4700 APU with integrated graphics, so I think I have a better CPU than you (probably) but not a better GPU. The Xenosaga series are known for being very CPU-bound. 
Here are a few "highlights" to improve performance from my testing that might help you:
1) Use the Aggressive CRC hack. It removes sepia tone filters from cutscenes, but otherwise, it solves a lot of problems. 
2) Speed hacks generally don't do much but cause glitches. The MTVU multi-threading hack fixed some issues caused by the Aggressive CRC hack for some reason. Using the CD speedup hack seemed to help a little, as well as the wait-loop detection hack. MVU flag hack caused glitches I didn't like. 
3) Don't include anything that doesn't improve the image. Anisotropic Filtering does nothing, this game uses fixed camera angles, so extreme angles aren't shown anyhow. Dithering didn't seem to improve anything. The main thing that improves the image is anti-aliasing, keeping blending accuracy at medium, and keeping mip-mapping. Mostly keep the defaults, just turn off the things that don't make a noticeable difference. 
4) DO NOT use auto-flushing of textures. Big slowdown for me. Disable safe-features. Force-disabling half-screen fix worked for some people but not for me ever. Turn on tri-linear filtering. Set half-pixel offset to "special (texture). Game didn't seem to like edge anti-aliasing on my Intel computer, but it works just fine on my AMD. 
5) For you, checking boxes that shift the load from GPU to CPU might help, since this is a CPU-heavy game. When you hover your cursor over the text for each option, it explains what each option does. 
6) Also, the Xenosaga games are notorious for the memory card function not working. Files get corrupted easily, and if you even try to access the in-game save point, the game will crash completely. The 1.70 development version appears to have mostly fixed this, but make sure you have the most cutting edge development version as these issues seems to have been fixed only this year. I'd recommend using the Save State function integrated into PCSX2 rather than relying on the memory card. If you do want to use in game saves, I noticed that turning off NTFS compression in the PCSX2's memory card menu helped make them more reliable. Even the natively ran game would occasionally corrupt save states, so PCSX2 is emulating a bug, which just makes the bug even buggier. The game when run natively would also show some slowdowns transitioning from one cutscene to another, which PCSX2 does better with but will still sometimes show.

A lot of this is either misleading or just not safe advice.

1) Xenosaga Ep 1 does not need any CRC hacks, this should be left on Automatic, as it should for almost all games.
2) I sort of agree with this one but I'm going to make it a lot more plain. Leave speedhacks alone, presets 2 and 3 are what they are for a reason, and Xenosaga works perfectly with both of these. MTVU is safe, no problems with it.
3/4) The only hardware hacks required by Xenosaga Ep 1 are Half Pixel Offset on Normal Vertex (fixes puppet strings), and Round Sprite on Full (fixes sprite misalignment in the battle UI and main menu).
5) Won't matter, based on my findings it is the opposite.
6) Memory cards are fine, Xenosaga does not have an issue with ruining them. What the game is actually doing is exiting itself if it fails to make a small enough thumbnail image. The dev builds ship with a patch which edits game code to replace this exit function with the same routine they later included in Ep 2, which instead lowers the thumbnail quality until it is small enough. No idea what you mean with save states or NTFS compression, both are stable and do not have issues at this time.