For sure the effects were groundbreaking; no doubt - it would have cost tons more had they gone the TNG route with filming miniatures against a backdrop, etc. The kind of fleet coordination with the starfurys wasn't possible before on a TV budget - but you could still tell the effects were extremely budget limited. The animators for the Starfurys sometimes wrote their own programs to control flight and stuff; and the best moves were controlled entirely by hand!
The thing that's hard to understand in this era of photorealistic FX is that visual effects in the past were usually about tradeoffs. Most effects looked artificial in some respect -- miniatures looked miniature, stop-motion looked jerky, bluescreen mattes had visible matte lines, etc. -- but we accepted those imperfections because they were the only way to achieve those images at all. It didn't matter that you could tell King Kong was an animated puppet or Godzilla was a guy in a rubber suit, because without that animated puppet or that rubber suit, the movie wouldn't even exist. For me, at least, it was the same with B5's effects. Yes, they were low-budget, but that's just what made them so important to SFTV -- the fact that they made it possible to create elaborate FX shots on a syndicated-TV budget instead of needing the resources of a tentpole feature. And they could actually do more than a big-budget movie with conventional FX techiques, like extend the shots longer or do more distinct effects in a single scene rather than cut between them, or let the camera swoop entirely around a spaceship and show it from every angle in a single shot. So the limited image quality and realism was the tradeoff for making all these images possible to depict on television at all.
It was the same with Hercules and Xena a few years later. The monsters Hercules fought were obviously computer animation, but they were able to have him fight monsters on a regular basis in a weekly series, rather than needing a year or two to create a single stop-motion creature feature. The loss of quality was offset by an enormous gain in quantity, which made it feasible to do a high-fantasy action-adventure saga as a weekly TV series in a way that wouldn't have been possible before.
Honestly, at the time, I thought B5's effects were pretty good, aside from things like thruster exhaust or flame which the software couldn't handle remotely convincingly. But I haven't seen the show in a long time (it's streaming now, but I haven't gotten around to rewatching yet), so I don't know how they'd look to me today.