The short version of this is "Yes it looks worse but it still captures everything you know and love."
Some of the textures are a little more rough or thin than on the Wii.
Makna Forest (title screen display thing) /
Bionis and Mechonis /
"Colony 9" /
Dunban's arm
Seeing
Reyn's shoulder here makes me think they may be using less colours because it's not a smooth transition there. It wasn't as bad on the Wii. This is only sometimes noticeable on characters and faces in cutscenes.
That said, the framerate is fine most of the time. The only time it noticeably slowed was twice during the prologue - when there's about a thousand Mechon moving around, shots flying, explosions and people talking, it dropped slightly for a moment. I honestly don't think the 3DS could've run this. I don't expect the slowdown to happen again.
At first I thought the voice audio sounded a little worse but now I think it might've been my imagination. The music is perfect as ever and if the voices have been trimmed down somehow, it's not by much.
I'm afraid I've only played one other console -> handheld port, which was BlazBlue Continuum Shift II, and something I've noticed here I also noticed in that. It becomes very clear where they've recreated some part of the UI (user interface) for the port and where they've just scaled something down. You'll get something that's tiny, hard-to-read, blurred. Because it's rescaling it's not always the best. On the other hand, you'll get new UI which is very clear and easy to read. Compare the pair...
Scaled:
Tutorial (would be tricky for some to read) /
Battle info screen (faces a little hazy, clock a bit jagged on the 3DS)
Remade:
Dialogue /
Chat boxes (both pretty clear, slightly different look.)
Remaking parts looks better, but at the same time makes them look gigantic. I suppose it's partly connected to the screen split. Keep in mind that this is an entire bottom screen.
Shop (top screen is stat box) / Save Screen
Top and
Bottom /
Equipment /
Quest List (bottom screen is the actual list)
For all the criticism of the visuals, it does do surprisingly well in other sections. Cutscenes and models of the main characters look great.
The in-game models
drop a little.
The in-game models of NPCs
drop a lot compared to the main characters (though I guess the NPCs weren't that detailed to begin with.) You really can't make out faces of a lot of NPCs unless you zoom in like this, where they look weird.
Battles look fine to me. The movement's all smooth, the audio's balanced the same as before.
Only other issue with the low-res is the map. The red enemies are mostly fine, but when you're looking for the black (now blue) dot for a named NPC or red (orange) dot for a special NPC in a town, the dot is hard to make out due to it being pretty much 2x2 pixels, and sometimes disappears entirely as you move near it.
The 3D effect is fine (helped by the N3DS). I think they might be sneaky and turn it on and off depending on how intense the scene is (it was off during the Prologue cutscenes if I recall correctly). It's not super-deep. If you'd like to see for yourself, go and look at the screenshots I've taken on Miiverse on your 3DS (they're all in 3D, apart from those of the bottom screen). I've got some images there that I haven't posted here, taken to demonstrate the 3D effect. I think the images should display fine for a regular 3DS, but let me know if it doesn't, I'm curious. My NNID is GaleSlash - look at my Xenoblade Miiverse posts and read the comments (more pics).
Extras are fine. Spend 1 token for the chance of a new song or model, or 3 tokens to guarantee one. Start off with 10 tokens, 3 per daily Shulk amiibo scan, 5 Play Coins for one, ??? by StreetPassing.
Starts with a small pool (tells you something like 0/8 models, 0/6 tracks) which will probably expand as you progress.
Model viewer is split by armour set. Weapons change with the armour set. (
Sample).
Jukebox plays tracks and continues to play them through earphones when in Sleep Mode. I'd say it loops perfectly but as I was writing this I was listening to either Colony 9 (Night) of Hometown (Night) and there was a slight jump. Others are fine. Good sound quality at any rate.