There is definitely some technical wizardry going on under the hood... I would not have thought such a close port was possible on the SMS without cutting a huge amount of content.
The Master System/Game Gear port of the first game has plenty of wizardry going on, too, but it was converted by a different software-house (Probe Software). It's really nice to see that the Master System/Game Gear port of the second has equal pedigree.
I tried both versions out, but I prefer the look of the Master System one. This isn't just because of the higher resolution, but also because there are some small differences in colour-depth here and there, and I actually prefer the look of the dithering employed in the Master System version.
I agree, incidentally - it really is a shame that these two didn't make it to retail. At least, for this pair of ports, the reason why is known, and that's better than is the case for some cancelled games.