So circling back on this tried the debug version of Dead or Alive 2 Dreamcast , which lets you control the light sources. Turns out the game by default uses 3 light sources, 1 per fighter and 1 for the stage /props(each light has ambient). you can then further activate 4 more lights( it affects both fighters) and change their type from directional or point lights. Its hard to control the color so turned each light on and off and they indeed add to the models. So in total you can achieve 7 lights but it drops the framerate to around 30 fps which makes the game run in slow mo. ( tried on a real dreamcast)
Probably why the cutscenes are locked to 30 fps on the dc i guess it uses more lights.
The situation isnt as dire as you all made it seem to be honest if it can do doa2 detail with 7 lights and not be a slide show.