Read this, please
http://en.wikipedia.org/wiki/Sprite_%28 ... raphics%29
I think where you're getting confused is in thinking that sprite = 3D, which is not the case. Sprites can be generated from a number of different sources, including hand-drawn pixel art.
To my mind, the reason why the 3D pre-rendered sprites in things like Mushi don't look as good as pixel-art or other types of 2D-source sprites is the initial resolution vs the target resolution.
If you know that your game's target resolution is going to be 320x240, you'll design and create your artwork based on that. When you're working with raw pixels in a bitmap/raster application, you'd be working (hopefully) at the target resolution, in order to get the best fidelity possible. Working at a higher resolution then shrinking will destroy a lot of finer detail and make a lot of extra work for you, and your sprites will look like ass.
If you're modelling your sprites using 3D modelling, it's way more complicated. 3D models don't really have a "resolution" per se, or I guess the resolution is essentially infinite? It's really only once the model is textured and then rendered to a target file or display that it has a "resolution". And similar to using a 2D source, if the source has a lot of fine detail in it, when you shrink it down to your target resolution, you'll lose all of that detail and end up with a chunky blocky mess.
Anyway, this post turned out longer than I expected, and I'm not an expert on this stuff or anything so someone will probably jump on something I've said, which is fine I won't be offended

And I haven't related it at all to scanlines, which is really the topic of the thread. So, yeah ...