Got it working in Unity, it is possible to look nice... obviously everything is pixelated and will move through those restrictions, but if something looks distorted or blurry, it's because it has some sort of anti aliasing (annoying but removing it fixes blur) or because it doesn't look good pixelated (my game is squares, if something doesn't look recognizable when rotated or scaled, maybe rethink it a bit. Though, I can't tell from your picture if it is already working or not.
Looks like while you're using 16x16 sprites, it's effectively being down-scaled, and the reason it might be a little wonky on top of that is if it's position isn't an exact int (like if it's at 89.367 or 89.071 instead of just 89.0 or something) you can get some odd visual errors when you're working with pixel-perfect stuff.
I haven't used Unity in a few years so I'm not sure what settings are available to help fix those quibbles, but I'm pretty sure that's largely why you're getting this result :thumbsup:
Good luck with a fix, I hope it works out for you!
