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The PS2 has hardware in it to play PS1 games. Since it's not done by emulation, it would look exactly the same. If, on the other hand, it was done by emulation (as PS1 and PS2 games are done on some of the PS3s), I could imagine perhaps losing some visual quality.
NOTE: This day and age, with graphics being where they are today, I'm surprised anyone would notice any sort of graphical downgrade on PS1 games.
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