Last update for today. ;)
These Riva settings seem to work to get the videos playing full screen:
Riva movies/intro2.mpg display=pip fullpip
If you have a 16:9 display, the movies play back in 16:9. If you have a 4:3 display (like me), they play back in 4:3.
Hopefully this looks good for you? :) Unfortunately I can't fix the sound issues, even with lower audio settings, so I guess this is a limitation. I tried HQAudio but this can make the audio go out of sync. I also tried AHI mode, but this also seems to not be much better.