This is why I wish the 3DS had more oomf. Seriously, those graphics are holding the game back, it looks amazing artistically, but them graphics hurt.
Well, to be fair, NO system can run those cinematics in real time.
Honestly, for me, the graphics arent whats holding this back, as like you said, the artwork approach is damn near perfect. Which is the games problem. It IS artwork, your character is running around on top of a drawing literally modified into a pop up diorama for the 3d effect. And for the visual aestetic it works wonderfully. For a videogame it pales horribly for any sense or feeling of interactivity or belonging in the gameworld. Its horrible for game design.
Couple this with the fact the games visual design is infinitely better than the games game design, as in things to do and see in these beautiful towns, (Compare it to towns like narsche in ff6) And the awful dungeon designs, and you have a very one dimensional game.
Its artwork and visual presentation is great, compromised by its complete lack of interactivity. The story is good enough for a jrpg, the battle mechanism, while traditional and outdated, is good enough to be positivitely considered a throwback with a twist. But the complete lack of interaction with the drawing you run around on top of called the game world, should be at the top of the list of things to fix in BD2.
Second, on the list of things to fix in BD2, after you know, not repeating the same damn thing and having to go all over the world fighting the same damn bosses 5 times.