As a side note, Terminator: Future Shock ([1]) had 3D enemies in '95 - but still 2D-sprite explosions and weapons.
[1] https://en.wikipedia.org/wiki/The_Terminator:_Future_Shock
[1] https://en.wikipedia.org/wiki/The_Terminator:_Future_Shock
First generation 3D games were kind of a mess IMO. They usually hadn't figured out the controls yet and polygon counts were so low I always thought they looked worse than sprite based games. It isn't a surprise to me 2D-sprites hung around for awhile. Billboard sprites are still a pretty good/cheap choice for symmetrical things like explosions.
[0] https://www.dfworkshop.net/introducing-daggerfall-scout/