I don't know what emulator you used, but whenever I run the PSX version through ePSXe, the Fire Cavern looks like everything's out of focus. It looks like two different rendering methods overtop each other, and the AA looks likee. Anyways, this 'demo' of the PC-version of FF8 looks the way it should. I recorded it with Fraps at 1024x768 (1280x1024 doesn't seem to work with my new vid-cards) and all the bells'n'whistles forced on it, but Windows Movie Maker insists on reducing it to 640x480. I at least recorded it at 2.1Mbps though, so it still looks great.
Finally got YouTube to upload the ENTIRE video without stopping at 80-90%, and added the link to the original post.
[edit] I just realized how hot Quistis looks in that PC screenshot. LOL







