It *could* be overheating, but then again, it seems that it could be a lot of things. I've tried it on a cold machine (new iMac), and the problem is there within a few minutes of watching full-screen video.
Here's all I know from this thread and my experimentation (and that of others):
1. It is not machine specific: iMacs, Mac Pros, and MBP are all affected
2. age of the machine isn't a factor: it affects brand new machines or those several years old
3. it is not a Flash problem
4. doing all the "normal" goodies (PRAM, repair, permissions, blah, blah) doesn't fix it
5. it is not a browser issue (happens with *any* browser)
6. it is not *only* video or *only* sound: it may be either or both
7. it is not Netflix (that is, Silverlight) because it happens in other apps
8. we *think* it isn't junk left over from 10.7 in the User folder because even a clean install on a wiped drive has the same issues
9. in addition to #6 above, the problem goes beyond just video stalls and audio "crackles": worse, it involves the entire system "rubberbanding" effect (the mouse or menus, etc. just lock up for 1-5 seconds then start working again.) Similarly, when the audio and/or video stalls, *sometimes* doing nothing for 5, 10, 30 seconds and everything is "OK" for a bit.
10. it is *not* other applications running or having run; lots of us have restarted (or shut down/restarted), and have no other (user) apps running except for one program when the problem starts.
Therefore, my THEORY is that this is a problem deep in the OS in terms of caching (?) or something (I'm not a programmer, so I have no idea) that's causing the problem to occur consistently yet sporadically.
After 2+ weeks of trial-and-error experimentation from all of us, it's unlikely that we will solve this issue.
However, if anyone on this list ***does*** manage to figure it out, you will be a legend, and we'll get c|net to interview you the next day.
Best to you all.
David