I'm pretty sure the problem is the new drivers. You might want to try the Omega drivers, which have better support for AGP, or wait for the hotfix to the 8.3 drivers.
Which video plugin are you using? Maybe try some of the video options, or try another plugin. I think Rice's plugin even allows newer textures for n64 game environments look like gamecubes (check emutalk.net), though it has been a while since I used project64.