This GIF was created by pausing and skipping frames in the editor. At 60 fps, they just look really rough. My diamond texture is a 128x128 PNG. I also tried 64x64, 32x32 and a TGA but there was no difference. What is causing this?
Looks like it was caused by Temporal AA. I turned it to low and the edges sharpened up. I decided to switch to FXAA. I can run FXAA on max and the edges stay sharp.
Edit > Project Settings > Engine (section) > Rendering > Default Settings (section) > Anti Aliasing Method.
Some additional info: