It does work very well for this screen resolution.
And what else would you do with this media given it's a feature phone?
Send it to someone? It probably supports MMS. Or transfer it to your computer over USB-C/bluetooth.
VGA is not that bad for phone pictures. If you scale down a photo from decent camera to VGA, it can look fine. The problem is that for VGA cameras, the resolution is the smallest issue - colors, sharpness, dybamic range are likely tragic.
You're right. It is the terrible jpeg compression which destroys everything.
This is an example of an image from my daughter's VGA camera: https://imgur.com/oMNkrUm
The image has ~100 KB which is plenty for this resolution. But the input data from the sensor is awful because the sensor and the optics are awful.