A full 3D world of this with little to no budget would be impossible to make with a high quality to it, so going 2D with the backgrounds seems like the best way to ensure quality and as the characters would still be 3D but made in the 2.5D fashion, that would still make them fairly simple and time efficient (as much as any of this could be called "simple") to make as opposed to going full out 2D, which indeed wouldn't be the best route to take regarding the animation of the characters etc.
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