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Hi. I know you didn't as me but I know some tools that may help. But perhaps i should warn that those tools are for local use.

But for doing a img2mesh there are huyuan3d based worlflows, not really game-ready in my opinion but maybe can help. Or 3D gen studio, but i never used it, so i can't talk about it. 

For creating art in PNG format I'd recommend Krita with the plugin Krita  AI Diffusion since you can edit the image while you made them and also can made the background transparent by just selecting and erasing it.

Another tool i recommend to background removal is RMGB-2-Studio, since is just drag and drop and also allows to process a bunch of files at once.

Hope may help. :-)

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Not sure if i am understanding. 

Perhaps you are referring to upscaling? that can be done in Krita AI Diffusion as well. Or an AI that does everything? So far i didn't saw such thing, but what you want can be done by using different tools in a workflow. 

Or perhaps you are referring to use something like Dall-E3 or Nano Banana to turn a draft into a image or spritesheet and then using a background removal?  Blender and Anim8or are good. In fact, you may need them for retopo and animation, and some cases even texturing since many img2mesh models don't texture or made a hellish UV map.

Taking about Rare's style I think common tools used back them were softImage and RenderWare, but i can't say for sure since back then was pretty common for studios to create their own engines and tools from scratch. Today the most close thing i can think that could help to create similar aesthetic are 001-Game Creator, AGE for 2D and the CopperCube for 3D, wicht  is powered by a really old version of Irrlich, a competitor of RenderWare. Maybe combining those with a 'old school' style lora may help.