you have the same problem on the ST regarding dithering, LCD screens are way to sharps, i know that the new beta of STeem in fullscreen mode (direct 3d) blur the output so it look like a crt picture.
here is a game that run a lot better on the C64 then on the ST, (it could have been coded to run much better on the ST than it did, a real shame)
C64
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Atari ST
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before some said, there in a new STE version that run better, i know but it is not the STE we are talking about