Or it was merely due to size constraints. I know that's kind of the easy way out in rationalizing all of the reduced content in DOS games, but seeing as it's a problem Bethesda still has to grapple with (Oblivion: duplicate voice acting, removal of Sutch, etc) it may have been a regular issue for them, even back then.

A similar inconsistency exists in the sprites for rats and bats - if memory serves, their front-facing graphics are roughly 1.5x as large as those of the side views.

This definitely was an issue back then. Hard drive space was adequate enough at the time, but RAM was expensive. For a long time, RAM was around $40 per megabyte, and Daggerfall apparently required 8MB of RAM. I remember paying $700 for 16MB of RAM, so with prices like that, Bethesda definitely could not count on people having more than 8MB. Considering how much data Daggerfall needed to have access to at any given moment, 8MB could fill up pretty fast.

I agree with that.

If a character is represented by a static sprite, or a sprite that always loops the same two frames of animation, it's easier to accept than if it's a statue-like model always perfectly static or an automaton endlessly repeating the same movement.

It's kinda like the uncanny valley effect. The more realistic something is, the more demanding we are about it being realistic.

The overwhelmingly static nature of Daggerfall's environments accentuate this as well. Virtually no 3D objects in the world move of their own volition, and not only would it be less apparent as to what you could interact with if NPCs and items were 3D, but to me it would just make them feel as impassive, uninvolving and gloomy as the world geometry around them.

Not to mention (again) that the finer details on NPCs would look somewhat unusual in voxel form. From a dead-on perspective, or at a distance, yes, a voxel model of the guy in my avatar may look fine. But upon drawing closer you'd start to notice all of the conflicting edges of the voxels and their different shades. It would be very awkward, at least in representing what you'd imagine to be contiguous and seamless details on the character like drapery and hair.

I know it is a bit late to chime in but I just want to openly support two notions.

1

Improved Bethesda style, perhaps not more than even triple resolution.
[(Remain Faithful!)Purist Even!]

2

Improved Sprites, much how Theseus managed to pull off. That's as good as we could have ever hoped for without a ridiculous amount of cooperation from Lucius. I think NPC Voxels/Models/Meshes/Whatevah would be a hassle. But I am no expert with such.

I just do things.

I personally liked Oblivion and skyrim

But DaggerXL will never look like these. Bethesda spent millions on the engine and the graphics design and a whole development group worked at this for years - fulltime; neither is lucius capable of creating an engine with all these modern features (or at least not too soon), nor will there be enough modelers to create all the meshes, textures and animations. So for now, all we can do and hope for is to enhance the graphics where it is the easiest, like re-drawing the sprites, maybe adding a few animation frames,correcting existing issues, replacing static sprites with simple 3d-models and creating high(er) resolution textures. AFTER that, we can think of bringing in fancy new features (I always thought of using tesselation to make the flat dungeon walls look more realistic ).

I agree, we should in every aspect of the sense, stay as vanilla as possible for DaggerXL. We can have our crazy stuff in the form of mods. The only thing we should try to deviate from the vanilla is the case of poor logic of certain things, bugs and the stuff that requires fixing.

Perhaps we should assembly every texture from Daggerfall and ask people to remake that particular texture. We need to organize too.

Everything (exept for the bugs) will be entirely optional. If you want, you can play daggerXL just like vanilla daggerfall, with the exact same look and feel.
But I agree, we should try to fix everything in small steps. A texture every day, and someday we'll finished (unfortunately I can't draw and I don't have a drawing pad either...)