I have Lands of Lore 2 also and experienced the same problem with choppy cutscenes. I was able to smoothly view some of the cutscenes from the CDs with this alternative program though:
http://www.fansiteads.com/tiberiumsun/downloads/utilities/vqa2avi.zip
This program allowed me to view various cutscenes on all four CDs without choppiness, but some cutscenes were either partially or fully inaccessible with this program and I continue my search for a better solution.
Please let me know if it works for you. It seems to work with most Westwood games.
Thanks,
Jeff
