You guys are coming off a bit overly critical. Are we seeing the same thing?
http://www.lizardcube.com/presskit/StreetsofRage4/
That is not bad, or ugly, by a long shot. Those are good looking backgrounds, and the characters are tastefully done.
We can't expect 3rd Strike level stuff from smaller teams. Capcom/SNK/Arc were masters in sprite art for combat games... Give these guys a break.
I'm personally looking forward to this, it's always interesting to see a group of passionate people try to make something new with a franchise that has this much cultural impact. It's a shame that the focus is more on aesthetics, which are, ultimately, completely subjective, and not on how freaking cool it is that the people involved actually know their stuff, and are passionate about the source material.