If you use flawless widescreen, there is an option to upscale the movies to fullscreen.
You can also disable the pre-rendered movies (not the in-engine cut-scenes) by using the config tool in the game directory (this may fix some crashes).
Here is the guide for all things widescreen and mods: http://deadlystream.com/forum/topic/3142-guide-xuuls-ultimate-guide-for-kotor-2
I run the game on Windows 10 with a 1920x1080 display, using Flawless Widescreen (all KOTOR2 options on), and have set the compatibility for the shortcut to WinXP SP3 (the latter primarily to ensure that the racing mini-game works properly without getting stuck on the roof). I have also configured the shortcut to run the game in fullscreen mode (with the "-fullscreen" option), so it doesn't start windowed.
I'm also running the latest TSLRCM, plus have incorporated lots of HD mods to enhance as much of the graphics as possible - but Flawless Widescreen + WinXP SP3 compatibility settings should do the trick regardless.
Oh I also needed to run the game as Administrator - but you should probably be prompted for that anyway.