Ok well I was going through a list of filters for emulators and stuff and I came across this filter.http://en.wikipedia.org/wiki/Hqx A pixle art scaling algorthm to smooth out jaggies in pixle art. I suppose the same concept could be applied to every picture daggerfall uses. I don't know much about the processes of daggerfall so I do not know if this could work or not but I am going to post this anyways!

Unfortunately, hqx is only useful for cartoony images where there are few colors, well delineated. If you apply it to the smooth shaded images of DF, it just kind of munges them up.

It is possible that 2xSAI might do better, based on seeing how well it works on "the Doom head". I use that as an example because it is closer to the kinds of artwork that DF uses than if you consider Mario or Yoshi (like the hqx guy does).

Here's a scaler comparison, using the Doom head as a reference. Note that several of them are just there to recreate retro looks, not to improve quality.

http://www.dosbox.com/wiki/Scaler