as for what i think of cut-scenes, i'd say that as a rule i'm against them. video games are a medium dependent on interactivity, cut-scenes take out meaningful interactivity, and i'm sure everybody has heard something like that. that said, you can't really put rules on a creative medium. there are some cut-scenes that were meant to give a sense of helplessness by taking away interactivity and can work sometimes. there are others that work sort of like an overture to get the user in the right mood and that can work sometimes too.

but really, it's always a fine line. my biggest pet peeve is using the cut-scene as the vehicle for telling the story. it diminishes the gameplay by saying "we don't think it's possible to get this idea across through gameplay," but it also diminishes it by simply taking all the context out of interactivity itself. if the game is meant to tell a story and all the story is in the cut-scenes, the gameplay is basically worthless.

as for when they got out of hand, it's hard to give any definite answer. FFVII was a big deal for consoles and everybody raved about how good the cut-scenes looked and how great the pre-rendered backgrounds were. i'd say western developers really took to cut-scenes and that sort of thing this generation due to hardware troubles (which, actually, effected some japanese developers too). but even then, there had always been stuff like dragon's lair floating around.