It's kind of sad how low-resolution and overcompressed the in-game renders are by current standards.
They actually aren't compressed at all; they are stored on the CD as uncompressed 16-bit images. Perhaps what you notice is the dithering? Myst was the same way, but 8-bit. Computers of the day weren't fast enough to decompress images during game play with decent speed.
I have the original CD version, which still works on XP with a few tweaks. Have loved it since day 1.