When I inserted the video for the intro to the Cruise Missiles (I believe that was the first use of video in an OFP mission ), I followed this method:
A) Get video clip
B) Run a program that strips the clip to sequential .jpgs
C) set up a Photoshop Batch Process that loads each .jpg, redimensions to OFP dimensions (I think I picked 128x128), and saves (in superlossy jpeg) without the EXIF data (Save For Web) to a sequentially numbered files.
D) have a dialog with a CtrlPicture that covers the entire screen (x=0,y=0,h=1,w=1).
E) Call up the dialog in mission/cutscene
F) Use CtrlSetText and a proper timing loop to roll through the images in sequence.
I think BadAss put more details than this in his tutorial on cutscenes (in German).