Emulator

Looks like a bug, have you tried playing with the settings at all?

Yep, and they still displayed incorrectly.

Neat. If you have a spot very easy to get to, can you try using the interpreter. It has to be VERY fast to get to, because the interpreter will be extremely, painfully, horridly slow.

Can you also try https://dolphin-emu.org/download/dev/f9b5571ddd49e212de229dd6567a5ae076e6fd1a/ on D3D? Just a hunch due to how another game behaves.

Well, tried interpreter, and after 10 minutes of waiting, it still looked bad.

I also tried software rendering, and it looks better, but still doesn't display like how the subtitles look throughout the rest of the game. However, maybe there are two subtitle behaviors? I say that because the subtitles were appearing sentence by sentence on the screen as the dialogue was being spoken. Which feels correct, but they still don't behave like the rest of the subtitles which the entire paragraph is displayed as the dialogue is being spoken.
So I don't know, maybe the FMV has a different subtitle routine?

Tried the version you posted with D3D and OpenGL and it still looked bad.

Maybe this is the issue? https://github.com/dolphin-emu/dolphin/pull/2571

I really don't know. If you have anything else for me to test, I would gladly do it.

Try latest master; it was merged in.

Still looks the same.