Definitely a result of scaling. I don't know how straighforward the graphic code port is, but I would at least expect the 3DO version to contain some sort of mipmapping-like algorithm to prevent this sort of thing, otherwise the game would be unplayable.

As you know the PC version does not suffer from this, because it merely has several zoom levels; UQM should probably feature a "trilinear filtering"-like method of scaling, where you have several versions of each sprite with varying sizes, and the scaling interpolates between them as it scales the battlefield. This would definitely adveresely affect performance, but since UQM is 2D, I don't expect there to be a big difference on modern machines; moreover, since the code uses OpenGL (at least as far as I remember from the last time I had a look at it, which was in my last proper vacation in September...) this should easily be done in hardware...?