Were the backsprites in RBY bad by today's standards? Yes.
Were they bad by the standards of the 1990s? As previously mentioned, they weren't great.
But does that make the games unplayable? Obviously, that's a very personal question, but I still enjoy RBY, even if they aren't my favorite games in the series. I guess I've never cared that much about graphics vs. everything else, so the backsprites don't really bother me. Give my blob of pixels a nickname, and I'll still quickly become attached to it. And with simpler graphics and animations, the original games play more quickly than some of the later generations (especially gen 4--battles were so slow in that generation), which makes it faster and easier to jump into the action and immerse oneself in the pixelated world of Pokemon.
As for the mechanics, which seem to be the more relevant part of this topic, they are reasonably simple compared with modern gameplay. I personally like returning to the days when I could battle anyone I wanted with my party and not worry about messing up a perfect EV spread, but when it comes to competitive play, gen I certainly gives players a more limited set of options than some of the later generations. It's kind of nice to get away from held items and natures and the physical/special split every once in a while, though, as the changes have made for a very different metagame than the one we see today. While I've never really played gen I competitively (aside from on Stadium, but there, I pretty much just brought my in-game team in or used the not-too-good rentals), it's fun to have a different set of viable options at my disposal than the ones I use today. Yes, gen I battling is probably less balanced than gen 6 battling, but it's fun in its own way, and I don't find it unplayable. I still enjoy firing up my N64 and playing some Stadium, or watching/playing the occasional gen I match on Showdown or another battle simulator of choice. Though I knew nothing of competitive battling when I first played through Red, I've read a lot of gen I related articles over the years, and it's actually quite an interesting game.
One of the elements I find most intriguing about gen I is actually the thing that scared me most about it when it was a kid: glitches. The games are obviously incredibly glitchy, to the point where I sometimes wonder how I initially managed to play them without making something go wrong. I remember first learning about the Missingno glitch, showing my friends, and then being terrified that they would trade me a glitch Pokemon and mess up my game. But as I've come to understand the various glitches in RBY more thoroughly, I've come to appreciate how relatively simple code could create a series that brought me hours of enjoyment in my childhood, and how easily something in that process could go wrong. As a relatively inexperienced programmer, the coding of the newer games is too complex for me to really get my head around without more effort, but RBY are simple enough that when I read an explanation of why each glitch occurs, it makes sense. Thus, I enjoy returning to RBY not only for the nostalgia and for the differences in gameplay and mechanics, but for the hopes of discovering why the game operates exactly as it does, and how GameFreak built (and sometimes messed up) this foundational chapter of my Pokemon experience.
That being said, while I still think that playing RBY has value, it does seem like high time for another remake (or perhaps a sequel set primarily in Kanto). I personally like Kanto (it's probably my second-favorite region, after Johto), and I feel like it could definitely be fleshed out a bit more with XY graphics and mechanics. A Yellow remake seems unlikely to ever happen, since it was so tied in with the anime, but given the recent game-per-year trend, an RB remake doesn't seem out of the question.
