Why word this like a conspiracy theory? dozens of games have used 3d as a base for sprites, some more and some less obviously than others.
Blizzard used prerendered sprites in many early titles, including starcraft, diablo, and warcraft. Many interplay-published games, such as Conquest of the New World and titles within the popular Fallout, Baldur's Gate and Icewind Dale games also use prerendered sprites. Command and Conquer is another one that comes to mind, along with the popular Total War games (Shogun and Medieval), Ultima online...the list goes on for AGES.
the ultimate reality of of a resized render and particularly mid-90's capabilities is that they require either extensive redrawing or tracing, so while many games on this list appear pixelled (outlines, low color counts, very few frames), the reality is that it was at one point cutting-edge.
Is it useful? for MANY games, I think not at all. most animators have the experience necessary to animate a human in far shorter a time than it would take, as you've said, to model and render. For other games, i think it's great. A quick scan of the list reveals primarily isometric views, which are notoriously more difficult to draw for, as well as monsters which an animator may be less experienced with and vehicles which do not need to be rigged. In additon, they typically have 8+ rotation frames (most have 16), which is also far faster to do this way than by hand. However, without total redrawing they all also lack the pixel precision and cleanliness that many games require, so you'll also notice that they fall generally within the RTS category (famous for unclear, "realistic" graphics).
