I've done some searching and I can't seem to find anyone else who is having precisely the same issue.

What's happening is that the game runs silky smooth, at a good frame rate,
BUT every few min, IN PARTICULAR before selectable dialog, or before there is slight scene change, the game freezes for about 5-10 seconds. The screen then briefly flashes black, and then everything appears again, and the game runs normally for a few minutes, until the issue recurs, under the same circumstances.

Specs:
OS: Windows 7 Pro 64bit
CPU: Intel i5 2500k OC'd to 4.2 GHz
RAM: 8 GB DDR3 1600 low lat (The game only seems to recognize 4 GB, not 64bit I guess...)
Video: ATI 6950 2 GB (Firmware flash to 6970)
Video Driver: Catalyst 11.5b

The closest similar problem I found was here: http://answers.yahoo.com/question/index?qid=20110518201033AAwgXDZ

But there was no solution...

Additional note: I run the game on the highest possible settings sans UberSampling. (Texture Memory Size: Very Large, LOD Distance: Far)

Thanks for the help...

No one else is having this issue?

Video: http://www.youtube.com/watch?v=a-3tdngPL7c

Unfortunately you are going to have to turn off some graphic settings to see which one is causing the problem. It really seems like a graphic glitch.