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I thin, that what Tesla guy was trying to say was, when you change resolution in PJ64, why is it only the 2D/backdrops that look less squared/better and not the polygons.
I think that this is because 2D objects can be resized, but when they are, they go all squared up (try walking up to a wall in Goldeneye), so by changing the resolution mode, you give the screen more picles, making the 2D object appear to be less resized (some how). When you resize a polygon, it doesnt go squared - I dont know why...