Your image is fine. It’s what one gets with the dithering of many PS1 games. The other image you refer to either uses the de-dither hack, or has some additional smoothing after the OSSC.
It’s a common misunderstanding, that the “pixelated” image is caused by some bad sampling or upscaling. It is actually the most accurate display of the original image. Thing is it would be blurred on a CRT and then looks much better. This is also why you perceive the image looks better at line x2, this is because it is then a 480p image being upscaled by your display, adding the blur necessary to make the image more palatable.