I think XY actually has better resolution depending on your perspective. I agree that the minimum extrusion is approximately a line width circle. But that circle can move less than the line width for features on larger surfaces. For example, if you emboss something on the side of an object with 0.3mm depth using a 0.4mm nozzle / line-width, it will work fine.
Yeah, I suppose it depends heavily on the kind of detail. I was mostly thinking along the lines of printing lithophanes or hueforge prints.
With lithophones it's typically recommended to print upright so the image is formed by stacking layers, as that allows for "pixels" to be thinner. Hueforge instead is typically printed flat because color stacking/blending needs more resolution than the shapes.
