It certainly would have been possible to make beautifully animated action games for the PC-FX. It sounds like it would have been the most enjoyable system to program, too, and clever design probably could have gotten some surprises out of it. On the other hand, almost every graphically-fancy 2D game from the 32-bit era would have had to have been compromised in some way to run on the PC-FX with little room to compensate in other areas.
This ... but with a few limits to my agreement.
Anything 2.5D or 3D (like Radiant Silvergun) would have needed the "3D" add-on in the PC-FXGA (basically a VDP1), to even start to compete, and then you might hit 3D-math performance issues with the V810 processor. OTOH ... it would have been able to pump out scaled & rotated sprites like mad!
But for a lot of the best 2D games that are relying on high-quality pixel art ... the Saturn's theoretical CPU power (it was MUCH lower in practical use) wouldn't be of any benefit at all.
After a quick look at YouTube ... I don't see that the PC-FX as-it-shipped would have had much trouble doing excellent versions of 2D games like Lunar or Princess Crown.
Sure, your backgrounds would probably be 256-wide instead of 320-wide ... but you
could switch the PC-FX VDPs to 320-wide for the sprites if you don't mind losing its excellent multi-layer (I believe) transparency and using a Sega-style stipple-mask for shadows instead (probably not a good idea).
But where it would have dramatically lost against the Saturn in those games (in some sections) would be in the audio.
You'd *sometimes* need to keep the CD drive free for streaming new graphical assets into memory (on both the Saturn and the PC-FX), but the Saturn's audio hardware could still play back good music anyway.
Then the PC-FX would be limited to it's PC Engine sound, perhaps with an ADPCM instrument or two, and with no DSP-effects.
*PERHAPS* the PC-FX could have gotten away with streamed-ADPCM-audio, but the CD-seeking would have been rough on the drive.
Basically ... I think that the PC-FX could have done some really-nice 2D games, but there would always be *some* aspect where you'd say that the Saturn version was better.
The PC-FX's better FMV, and better transparency-control might have helped to mitigate those effects
But practically speaking, out-of-the-box, the Saturn has the more-powerful hardware ... it's just a huge PITA to program, and some of the limitations of the VDP1 and VDP2 can trip you up.
The PC-FX, OTOH, is a clean, simple and powerful architecture, just like the original PC Engine was in comparison to the limitations inherent in the "more-powerful" SNES and Genesis architectures.