I say first then; let me explain.
When looking at a game, especially a sidescroller, from a tactical perspective, it becomes less challenging, resulting in a boring game when you allow the user to view far ahead. Isn't part of the fun of a sidescroller not knowing what is to be expected, and having to use your skills in order to beat a level. Where is the fun in seeing traps/tricky spots before you actually reach them?
When looking at the game from a graphical perspective, you must realize two things. First, just because the graphics are exploded does not mean they are going to look bad. There should always be a windowed mode for those of us with huge monitors, so that it is not too stretched. And second, it's an established sprite to screen resolution ratio. It's what a lot of people are going to be used to. In my honest opinion, the second screenshot just looks/feels wrong.
Neither of them are necessarily wrong, I just feel that the first screenshot is what most people would be most comfortable with.
If you have a differing opinion, please share.