What custom firmware are you running, and are you using popstation?
The answer to your question is most likely that FF8 runs like crap on 3.80 m33. (I know most rpgs do.) This means popstation will solve all of your problems.
http://www.dark-alex.org/
EDIT: I vaguely mentioned popstation where I meant to specifically state
Popsloader which is entirely different. It's a plugin that lets you optimize PSX compatibility by letting you specify what firmware you want the game to run under. So if you are using 3.80 you might try using 3.72 or 3.71 and so forth.
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