These graphics aren't actually that bad, to be honest. A measure of what 'bad' is really depends on hwo you deal with either hardware or self-placed restrictions, not now how many bits, pixels or polygons are involved... entirely. Graphical style can change things too, like the cell-shading used in Wind Waker and Okami, both of which look fantastic if you ask me.
Retro graphics can look pretty bad-ass, though; just look at Megaman 9. It benefits from a kick-ass 8-bit soundtrack too.
I'm not a big fan of stupid arbitrary time-limits, though...