I'm aware graphics play an immense role in the popularity of a game, but they aren't always an essential part.
My point is really that, yes the faces look strangewhen they try to talk (emphasis on try), but it doesn't bother me much. It did initially, but then I realised that it wasn't too bad, and kinda humourous in it's own right.
And other games do it by rendering the cutscenes seperately from the game engine, whereas JK2 tries to do it using the in game engine (originally tried in Homeworld I think, where it worked incredibly well), but they added objects to the faces, and obviously their meshing of those objects wasn't perfect. It probably was meant to be temporary, but when time came to release they had spent too much time writing the game, and could replace the temp cutscenes with real ones (so they got polished a little, and fingers were crossed).