The fad caused too many developers of games for all consoles to waste frames of animation on pre-rendered scaling instead of real artwork and animation.
Exactly, this ruined a generation for me at the time. I've gone back and "gotten over it" but at the time it was atrocious to me.
I think that the fully pixelated part of that explosion is a poor attempt at mosaic, which several other PCE games do well.
These over-scaled explosions are one of the examples of how poorly it can be done, I would say. I agree, that there are a lot of examples of it well done, but man this is a example of how fugly it can be when done in excess.
El Viento on Genesis was one of the stand out criminals in doing this, 4:20 in it starts. The inital explosions are not too horrible, but once the squids/octopus shows up.
But to keep it on topic, what are some of the good obey examples of sprite scaling? I think this game does a admiral job, from a video perspective, but I am sure there are plenty of better examples.