I'm afraid that, if you can't boot into OS 9, then you're out of luck. I have the exact same problem when running WC III -- in "Classic" mode in OS X, the game actually runs *very* well (and loads in about 2 seconds), but the videos are so choppy, they're almost unwatchable.
My newer iMac can't boot into OS 9, though my older, now-defunct iBook could. When booting up from OS 9, the game ran *flawlessly*, videos and all, and kept running quickly, smoothly, and stable the entire time I had it in my CD drive.
Then my CD drive melted, and since my warranty had expired... well, that was that. In a nutshell, though, if you can't boot into OS 9, then I don't know of any way to play the game the way it's meant to be played.
Not the answer you were looking for, methinks... but know that you're not alone out there