I think we'd get a less complex product. Also, the game would take a helluva lot more time to get done, hence splitting it in Scenarios to get things done faster. Had they put everything into a single game, the game would only get done a few months before the Dreamcast launch (by the time Scenario 3 was done). They needed to released it ASAP and get something from the bits of life left in the Saturn (in Japan, at least).
Also, the 3 scenarios would NOT fit a single disc. Scenarios 1 (204 MBs) and 2 (256MBs) could easily be put in a single disc, but Scenario 3 alone is ~440MBs. Rarely Saturn games got past 550MBs (in data, not audio), even the multi-disc ones. Each Policenauts disc is ~560MBs. Having two scenarios in onde disc and another in a 2nd disc would make the scenario thing less elegant.
Having them all Scenarios packed as a single game would be as bad as having Lord Of the Rings in a single, loooong, movie.
I liked the fact each Scenario could be played on their own. Also, since they had devlopemnt time between each game, they had room for improvement.
Scenario 2 moves a few steps ahead from Scenario 1: new cameras during battle cutscenes (you can actually see the characters face), character models have more polygons, more texture detail and are overall better modelled. Just look at Medion's armor, with spikes and lots of plates, or Hedova's sexy body, the Rainbloods and their animated capes, heck, even Basanda and Julian seem to have been touched up a bit. The summons are less afraid of pushind the Saturn, too, and they added different animations for level2+ summons. The new summons are *incredible*, and I dare say they reach FF7 quality *with textures*. Thor and Zephyrus are a sight to be seen, the last one featuring a model with detail I never saw in the Saturn (the woman with wings instead of arms - almost-Shenmue quality face in there).
Unfortunally, I only saw Scenario 3's first battle (I *have* the goddamn game, but my backup cart blew up and I have other games in the line, occupying my backup RAM, and absolutely no free time), but from what I saw here and there, it seems to manage to improve upon Scenario 2 too.
Such amount of attention would not be possible if all three scenarios were squished into a single game.