Originally Posted by Chibi Nappa
Bilinear filtering (or whatever the heck kind of filtering they do) lets them quickly fit the game on a PS2 screen without any additional work. Say the Neo Geo orriginal runs at 312 X 215 (I have no idea what Neo Geo resolution really is, but this is just an example). Then say the PS2 has a low res video mode of 320 X 240 (again, I'm just making numbers up). The Neo Geo orriginal doesn't really fit in the display resolution available on the PS2. A considerable amount of work is needed to re-build it to fit.
With filtering, all of that work is skipped by letting the PS2 hardware stretch the game image out to 640 X 480 and then blur out the edges. It is quicker and cheaper, but it gives the game a coat of fuzzy haze and some nasty interlacing artifacts.