Thanks to all who responded! I made a few discoveries by playing around according to suggestions, and this is what I came up with:
For RE2/3:
- switch sound plug-in from Null2 Audio Driver 1.4 to the ePSXe SPU core 1.4.0
- enable XA Read
- possibly enable CDDA Sound
Voila!!! No more skipping or cutout during dialogue, not even scratchiness.
Unfortunately, there is still slowdown during such events as the explosion at the very beginning. Don't know how to get around that...?
It's great to have fellow RE enthusiasts who don't mind sharing (or cheating, to play differently!

).