Driver was ace as it was too and came long before ps2, might as well say every old game would be better with more power regardless of the year of release or something. Like hey we see how Tomb Raider or MGS can look now, shit on Tomb Raider and MGS as it was back then as inadequate? I guess I just don't get this deal...
Think of it like this: imagine Ken Levine had his vision for Bioshock very early on: the gameplay mechanics, the rich world and visuals, the water flooding everything, the water physics and interactivity, lots of bloom and lighting effects and particles, multiple enemies on screen, the voice acting, etc etc. Everything that he and his team managed to implement on the PS3 / 360 back in the late 2000s. But instead of releasing in 2007, imagine instead that he tried to implement all that stuff on the PS2, late-gen, 2 years earlier. Would it have been a playable game, decent-looking? Would the devs have employed clever hacks to wring the most performance out of the PS2? Would the result have gotten the
gist of his idea across? Yeah, maybe. It'd be interesting to see. But I think many players of that time would've gotten the impression that Levine was trying to force the PS2 hardware to do more than it was capable, and that Levine had a bigger vision in mind at the start than what the PS2 was capable of, and that the result was definitely straining the PS2 hardware and was not an ideal fit.
Now, imagine that instead of making Bioshock for the PS2, he made it for the PSX instead, even earlier. Would the result seem more strained than the PS2 version? Would it seem more compromised? I'd say definitely. A fully-3D PSX Bioshock that tried to implement all the ideas of the PS3 version, but in a very gimped way, would very obviously be a bad fit for the PSX. I think the vast majority of people playing it would be able to get the sense that Levine's original vision far outstripped the PSX's capability. Contrast that to the hypothetical PS2 version, which would be in more of a gray area--some people would think it was fine, some people would see it as compromised.
PSX Bioshock is an extreme example to illustrate my point. I think that, at best, PSX Vagrant Story sits in a gray area. The same for some of the other examples that people have brought up in this thread: Driver etc. For VS, the optimizations and cheats the devs did to try to implement Matsuno's vision are admirable, but again, I think the game is compromised as result of trying to cram his original vision onto the PSX hardware.
Contrast that to something like MGS1, which you brought up: the enviros feels blockier than VS's, more simple and less lush. The character models feel less detailed. The cinematography isn't as skilled as VS's. In general, MGS1's execution doesn't suggest a grander vision on Kojima's part, that's crying out for more hardware horsepower. It's blocky and quaint, and the jankiness doesn't detract much from it--it feels right at home on the PSX. Meanwhile, the greater attention to detail and skill and vision that went into VS, all those things ironically make it seem burdened by the PSX's shortcomings: the wavy textures, the jankiness as the camera moves around in cutscenes, the giant texels, the low polycount. VS seems to cry out for more horsepower to realize its original vision. Is the final PSX result charming and skilled? Yes. Did the devs wring every ounce of power from the PSX? Yes. Does it have amazing pixel art? Yes. Is it a good game? Yes. Do I think it's compromised? Yes.