PS1 game that has better battle graphics than FFXIV

[Zantetsuken]

It has flashier particle effects, not graphics. Even XI (a 2001 PS2 game) has better particle effects and continues to. In essense the magic/ability effects suffer from what the rest of the game suffered from -- rushed release. A lot of it literally screams placeholder if you've ever done particle design before.

Exactly.

The graphics engine can do amazing stuff but they haven't really used it yet.

Also, there is no point in working on enhancing the spell effects until the list of spells is finalized in accordance to changes in the battle, class and job systems.

My guess is that the tweaks (level up fanfare, 'larger' spell effects, etc) we've had over the last few months have been attempts to keep players involved while they work on the big stuff. When the FFXIV team unveils the class/battle/terrain changes and the subsequent tune-ups following them, the game will start looking very nice indeed.

Just have to be patient.