SirPrimalform: Could they not have doubled the lines on playback?
TigerWalts: Line doubling could have been an option but without a really good filter it's going to look terrible. A filter that doubles the lines and then smooths them would have been too much for most machines of the day. There were CPUs that could do It, but the system buses weren't made for the extra bandwidth required. A dedicated optimised codec would have worked but you'd be shutting out the half of the market with the slower machines.
I didn't say anything about smoothing, I literally just meant draw each line twice (or 'double thickness' if you like). This would have prevented the darkening effect of having every other line black.
I don't see why it would look terrible really. The resolution of the video would be the same, each line would just be thicker.
EDIT: Just to demonstrate, I downloaded a screenshot of one of the cutscenes and messed around in GIMP.
The .jpg is the original, the .png is after line doubling. What I literally did was copied the screenshot onto two layers, made all of the black scanlines in the upper layer transparent and then moved it up by one pixel so it was in front of the scan lines on the lower layer.