I'm getting tired of you throwing the term "Phong Shading" around. This isn't the first time you've abused it. Phong Shading does not encompass every lighting solution that is smooth.
I have assumed that a potential implementation of a 3D display mode for BYOND would use Phong shading. I'm not sure how that's abusing the term.
I don't think that Phong Shading can be feasibly applied to flat sprites in a 3D environment without a normal map, as it would be pretty clear that the sprite is flat.
When you look at this image do you really think "that person looks like a 2D sprite" because it doesn't have a normal map applied to it?
Even with normal maps the sprites would look flat because:
* They are 1, 4, or 8 directional.
* They may be billboards or standing at a fixed angle.
* They have limited resolution (they get blockier when you zoom in)
* Animations will clearly be a sequence of images and not a smoothly moving 3D model.
Phong Shading does not encompass every lighting solution that is smooth.
It has mostly to do with diffuse reflection (which is not unique to phong), Phong surface normal interpolation, and specularities. Diffuse reflection alone doesn't warrant the use of the term.
In all seriousness, Phong doesn't really apply to a non-3d environment. The fact that surface normals and specularities are involved kind of require a 3d environment. You could probably emulate it if you had normal maps associated to every sprite or tile graphic, but that is clearly not the case here.
Your screenshots might be using phong shading (though they are not a very good example of phong shading), but keep in mind that your examples cannot be considered 2D anymore. I don't think that Phong Shading can be feasibly applied to flat sprites in a 3D environment without a normal map, as it would be pretty clear that the sprite is flat. It would stand out and not look any better than flawed 2D implementations of lighting.