Did you see Virtua Fighter in motion? I guess I could see someone not thinking it's an improvement if you just see it in a magazine, but seriously:
https://youtu.be/I5qQCdkHJFE
The animation is so gorgeous! So smooth and fluid compared to sprite graphics. In motion, I don't get a sense of blockiness - it really looks like a good approximation of two realistic figures fighting.
I find it a bit hard to imagine anyone seeing that in 1993 and dismissing it as "ugh, blockiness". I really think it's one of the greatest and most influential leaps in video game graphics ever made.
And it came out just two years after Street Fighter II.