I played games in 240i too; and I enjoyed Muramasa's graphics. It's just that Sonic Colors's resolution in particular stood out to me as constantly distracting.
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That's nonsense. Sonic Unleashed is also on the PS2 and the Wii, and the version released on those platforms is actually the better one according to critics.
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Doesn't change the fact that it's still a completely different engine that needs to be programmed for differently. That would be a third version of the game they would have to develop.