This paper considers a cross-layer optimization framework for video streaming in multinode wireless networks with a time-varying interference environment. We develop a distributed joint power control and rate adaptation framework that exploits the time diversity of the wireless channels, satisfies the hard delay constraints associated with video applications, and respects a certain fairness criterion among the nodes. The proposed framework performs power allocation at the physical/media access control layers to achieve a certain target signal-to-interference-plus-noise ratio, such that the difference between the arrival and the departure rates at the queues is very small, and performs video rate adaptation at the video coding layer (upper layer) according to the nodes' demanded video quality, their channel conditions, and a given fairness criterion. A main challenge here is that the adaptation of the video rate and the power control is not performed at the same time scale. We deal with this issue and model the power and rate variations of the nodes as linear stochastic dynamic equations and formulate a risk-sensitive control problem that captures the hard delay constraints of the video services and the fairness criterion for resource utilization. We provide an optimal solution for this control problem and illustrate the performance of our framework through simulations.