It just seems like you're arbitrarily drawing a line where performance is good enough for people to want to play the games, and you've put it in the relatively small performance gap between the PS2 and DC. If such a small gap could make such a big difference, the PS2 would have been annihilated by the Xbox, the Megadrive stomped by the SNES and the NES killed off by the Master System.
I don't see GT on PS2 competing with the phenomenal Rallisport Challenge 2 on Xbox any better than F355 competed with GT. But then again I'm not trying to draw a line of "can't support competitive gaming experiences" between the either the Xbox and PS2 or PS2 and DC.
It also feels like you're arbitrarily defining "dated" as "runs on the Dreamcast". There was nothing in 2000 that I can recall making JSR look "dated", but clearly there was a big gap in there somewhere for you. I doubt you would be willing to concede that Halo made everything on the PS2 look dated though.
On top of everything else, the Dreamcast also had a unique and compelling line-up of on-line games, which only began to show in the months before and after it was killed off. It came too late to help the platform make money. It's an entire area of gaming that seems to have no value, and be disregarded as an experience people might want in the rush to condemn a platform as dated for not having PS2 graphics.
It is not a matter of how big the gap was, but where that line of its average performance lies, and where the performance of others continue from there.
DC games were good, but they started to feel outdated to me in the same manner 32/64 bit games felt outdated next to the DC ones (that said that doesnt mean I do not rate them high. I am still craving for many DC games). I am not referring solely to "static" visual quality, but to what could be done on screen, the amount of interactivity and physics on top of the visual expression. To me it looks like Sega was aiming to create a console that targeted mainly arcade quality gaming for home because they still had the same mentality they had with the Saturn. It was easy to get direct results fast, with the expected visual quality of the arcades (higher polygon models+480i/p resolution+smoothed textures). The DC was the perfect machine to play arcade style games, and the hardware did not leave a large enough room to do more things with other genres.
No really, I admit that XBOX had games that the PS2 could not dream of like Panzer Dragoon and Rallisport Challenge 2 (didnt like the original though at all) and Halo were awesome and there wasnt anything on the PS2 in respect to those genres that could compete directly in terms of visuals, but I didnt find many XBOX games that made me think like that, although on average it performed better and could do much more. The majority of popular/good multiplatform games performed similarly on both, and the PS2 exclusive games performed well enough to minimize the perceptual gap between the two consoles (still examples like DOA on XBOX looked better than Tekken 4 but some Tekken 4 stages like the mall minimized the perceptual gap). During the PS2, XBOX era I remember clearly when me and my friend we were bringing our consoles and comparing how the multiplatform games faired on each and the best each had to offer, just to see what was achieved on each, and how far PS2 games could go.
On average the XBOX clearly performed better. But the PS2 could in general reproduce or fake effects the XBOX could do, (although not always in the same quality and bump maps are out of the question). The DC persuaded me that it couldnt even "fake" effects that were considered standard. It looked like the biggest and main improvements Sega aimed for the console relied on increasing polygons, resolution and texture quality and almost stopped there. So it always left me with a sense of "something missing". Especially in physics and AI.
I think you have misunderstood me about how I view the DC. I am talking solely about performance here. I do value DC's games, and there are many many favorites of mine.
This figure sadly was for second gen titles, developers the first year were straggling to get 1,5MP/s...
I remember that the Le Mans programmer said that he achieved 4,5MP/s (he said 5MP/s in another interview at the time, good old round number (marketing...))
I don't know if this is true (4,5MP/s) but it was in 2001 and only one game...
I remember that claim. I think also that the media was comparing it with Gran Turismo's visuals. I tried with a friend that particular game to remember how it looked. Well, I dont know where they put all those polygons. MSR looked like it had far more polygons and looked better too to me.
Could you imagine the DC ever trying to pull off something even remotely close to this -
http://www.youtube.com/watch?v=iqCydukUqKY
It wouldnt have done much of a difference believe me. They would have came with a more expensive machine in 2000 that risked the company's existence more. Besides they needed to get some revenues back for the two years of absence. The Saturn was bleeding money so that was no solution. Would they have started developing games for competition and suddenly go back into developing soleley for their console?
Unless Sega could come up with a cheap solution in 1998 that could compete hardware that came two years earlier (Which would have been utter impossible) they had no choice.
edit: And not to mention the loyalty and name damage they caused to their selves unlike Sony and the Playstation that were massive.