I tried to fiddle with ScummVM settings and the game itself plays just fine, but the intro is in really small window and the animation and sound are really choppy.

Has anyone experienced that?

This is a known issue with the DOS release of KQ7. The Windows 3.11 release used Windows' built in AVI codec and the DOS release used a different one that was slower. As for the size, I'm afraid it was always very tiny. Unfortunately, the GOG release doesn't include any of the Windows version's files, and even then you'd basically have to load them using Media Player outside of the game just to see them, as 64 bit Windows can't run 16 bit EXEs and you'd have to basically install Windows 3.11 under DOSBOX to get them to load. I do have such a setup myself, but it's very tricky to get it working.