he 3d technology was too new back then. And they jumped to the technology without much insight of the quality of the universe.
I assume your aware that there is a new kings quest in the making... King's Quest: Your Legacy Awaits, which when I initially saw the screen shots I was really sad. I guess they think 3d technology has evolved, but it still looks like ass in comparison to KQ7, which runs at much lower resolution.
There definitely a place for good hand drawn art in video games. See Machinarium, and a number of fire maple games like The Lost City. I found these much more satisfying then nearly any game using a 3d engine I've played in the last 10 years. Even the old prerendered games like riven/etc look better IMHO. Realtime 3D/polygon rendering is cool for things that need 3D, but this idea that even isometric games (starcraft/etc) need to be 3D takes away from the experience.
I really was excited about the new xcom until I saw the screenshots and found out it was using cryengine. Not that there is anything wrong with that engine, I just wish someone would do a big budget game with something other than that, unreal, or idtech. The use of one of three game engines for 99% of the games released in the past few years means that they all have the same look/feel in my book.