I have verified this is being caused by the 29/59 refresh rate bug on this NUC.
I have posted a video on Youtube as well, you can clearly see the diagnostic overlay showing the screen refresh rate is quickly alternating between 29/59 Hz whcih results in the flickering and jerky/choppy playback.
Can we get a reply from an Intel rep if this is fixable? If not I need to pursue a refund ASAP. I will also be posting negative reviews on the major retail sites documenting this issue as this is a deal-breaker for many like me who bought this machine solely as an HTPC/media player. Given it is marketed and advertised similarly, I feel the NUC is a defective product if it cannot adequately handle this issue.