This also occurs in the Runtime… but MipMaps are enabled?! WHYYY!!
Here’s what it looks like before using the “Restart Game” brick:
Then when killing yourself, and having the game reset, you’re greeted with THIS:
I know a way around this is to “Apply material and textures” to the object,
but doing so makes them appear SHADELESS.
EDIT: Here’s what it looks like with the material, texture and the Blend mode set to “Mix”
I also turned off Specular, though it didn’t change much: