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Honesty i think the biggest thing that changed was the art direction of the series as a whole but NOT the design direction. Sugimor's art has changed, the low saturated, watercolors of the past are vibrant cold colors, and this only progressed as the generations went on. In fact, gen III is basically the cut off point for that style. I can easily imagine volcatona or malamar in the classic sugimori style and their designs would fit right alongside Charizard and Weezing.
tl.dr the designs didnt get worse, the art direction got more generic and vibrant.
