As Art_of_Camelot said, that's simply what happens when you try to downscale a 160x144 image to a 96x64 screen, especially with very little processing power available.
For reference, I personally prefer playing on the CSE just because of the much better graphics. The speed is definitely worse, but you can somewhat make up for it in games where framerate isn't very important (like Pokemon) by setting a high frameskip value (settable from 0-9 with the 0-9 buttons). I often use 7 or 8. And make sure to experiment with the two "zoom" modes on the CSE as well. One does no upscaling and is faster, but may be a bit of a strain on the eyes.