IIRC Native was developed using either JagServer or BJL (don't remember which), which basically means that all of the data had to fit within the Jag's 2MB of RAM. In order to fit all of that data and still have enough RAM left over for the game to actually run, the graphics were all compressed, with the DSP being tied up with uncompressing data on the fly throughout the first level, which is why no sound was in that demo. Had they been using an actual development kit (no Skunkboard existed at the time, of course), things would've been a different story. If the Duranik guys come across this, I'm sure they can either confirm this or correct my faulty memory.
You're seriously overselling that Genesis port of R-Type. Outside of using some larger sprites, and with more frames of animation of the player ship, there's little that would be more visually appealing over Last Strike, regardless of the person's viewpoint. Last Strike uses far more colors on-screen, has much faster and smoother scrolling with more layers of parallax and no slowdown, and plays sampled music continuously that simply can't be done with the same detail on the Genesis. Anyone with the tiniest bit of a discerning eye can see this. I'm starting to think you're simply trying to stir up trouble since you're making rather ridiculous claims here.