I mean the video itself shows how much better Liberty City Stories looked on PSP which is a decidedly weaker platform than PS2. So I'm not sure what's so surprising about a poorly optimized PS2 game running even worse on Dreamcast.
It's not like GTA3 was a technical marvel on the PS2. 2001's visuals stunners were GT3 and MGS2, and arguably Tekken Tag Tournament before them (which was similar to Soul Calibur in that both of them were essentially remade to new consoles from PS1 tier arcade systems). GTA3 impressed with the world design and freedom, but it obviously could run on Dreamcast with the right amount of optimzation and tweaks.
What impresses here is the continued dedication of Dreamcast's fans.