Noted that the video distortion also happens on the Mega-CD side of things, but still not on the actual Mega Drive itself. A YouTuber, specifically patrikw25, gave me an idea. The grounding plates for the Mega Drive 32X… Perhaps they are actually required… It will be an interesting test and if it works, will definitely save me soldering 50-billion capacitors – if only for the short term.
Edit 2018-02-06: Turns out the grounding plates are not the issue. There is a Sega technical article on PAL VA4 Mega Drives and 32X units causing display instability after running for a while.