Depends; if the battle system is fun, so is grinding; the Neptunia series, for instance, where no matter how sadistic the game's feeling, I'm always at least 5 levels over what's required to beat the boss. Similarly, if the storyline is inmersive and well-paced, the fact cutscenes are unskippable is of little consequence since you probably won't want to; as in your reviled Final Fantasy VII :D if they're right before a difficult boss they can be annoying, yes, but that's why you grind so much to begin with ;)

1. I would just go to the toilet, get something to eat, read a book while the excessive, unskippable cutscenes play but aren't watched. Can't do this with 2.

Anyway I probably would not continue playing such a game. If I knew before I probably wouldn't buy it too. So choosing neither is always an option. :)

Suppose we have a game where:

1. In unskippable cutscenes, you have to press the A button (or a similar button/key on the controller/keyboard) in order to advance dialog.

2. AFK grinding is pretty easy; you just need the right setup (perhaps the game has something similar to Final Fantasy 12's gambits, plus places where enemies constantly spawn with an autobattle option) and you can just let the game sit and gather XP.

Would this change your preference?

Grinding. Too used to it, by now, already, it's the point past of no return... Only the MMO type of grinding was beyond my abilities, i am not legendary burn-out no-lifer, just a casual collector/gamer!

Depends of the platform.

If I'm playing on a portable console (like my DS) then I'm cool with grinding since I play portable RPGs to pass the time in the bus or in the train.
If I'm playing on my PC, then cutscenes. Having a cinematic experience doesn't bother me when I have the screen and sound system to enjoy them.

For example, I really enjoyed Disgaea on my DS, but I was bored with the PC version after just 1 hour.
And on the other hand I really enjoyed Valkyria Chronicle on PC (which is very cutscene-heavy. It's basically an Anime with playable battles), but I wouldn't even think about buying an ugly, stunted VC2 on portable console.

Maybe, although I would probably not want to play either game, but if I imagine that otherwise they are really, really very good, I think the negative fun factor would then be about equal. Basically you say the games are both wasting some time of me. That is not good in general but kind of equally bad. I'm neutral towards how the time is wasted. It doesn't matter really, does it?