Yeah, I originally was trying out Scale2x on KOF12's higher res (but still pixellated >_<) sprites, and the results are very good in my opinion.
But for Melty (and older KOFs, etc), the sprites are sooo low res that these kinds of filters do tend to damage some detail (especially faces/eyes), make lines look blobby, etc.
Whilst I think filters on KOF12 gives a definite better result (although some people still disagree, ingrates!) for a game like Melty it's more of a tradeoff and personal preference.
The ideal solution (if Melty's sprites are low res because of artist workload, and not memory capacity etc) is for them to apply the filter to their raw sprite data like I did, and then get an artist to fix up any lost details, shonky lines, etc.
This should be a less-work way to decently scale up all of their sprites, without losing much visual quality.
However, even just adding this filter to MBAA in software as an option (like how you can press F12 in MBAC PC) means that people who prefer this look can enjoy it, and people who prefer the original look can enjoy that. Everyone wins!
I'm sure we can all agree that these sorts of filters look better than the blur filter used by MBAC when you press F12, right?!