It's always been like that since LCD monitors are mainstream. Anything but the native resolution will look somewhat blurry. If you have an ATI or NVidia adapter you can force the driver to do all the scaling, which to me looks slightly better in JJ2's fullscreen mode than if my monitor does it.

I remember the days of CRT screens where you actually could lower the resolution to make things appear bigger without blur, since those screens didn't have pixels.