>>29
In theory, you could indeed render the polygons at a higher resolutions and use nearest neighbor interpolation for the textures. It'd be faithful to that generation of hardware in spirit and might not change the original feel of the graphics too much. However, many games that had great graphics for their time use clever hacks that cause various glitches when forcing the wrong resolution.
More importantly, we all know this setting is never used when you allow kids and/or philistines to change the options. The virtual console generation loves making a blurry, smeary mess of our heritage.
Fuck, nowadays it seems that half of the game emulators ship with bilinear filtering (or worse) enabled by default.
When you must display PSX, Saturn, and older games on a LCD, the best way to proceed is always to render the console game at its native resolution, and zoom in without filtering, avoiding values other than 200% and 300% if in the 100-300% range.
(And when using a CRT, use the original resolution, obviously.)
It's only starting with the N64 that rendering things at a higher resolution will sometimes start looking good.