ASCII-based. Technically though, many of the characters used are not part of the 95 printable ASCII characters, but that would be just anal on my part. Moreover, certain elements in the graphics are not entirely based on a terminal layout, for example, the shots from the ships weapons do deviate in a way that would not be possible in a terminal window. In any case, those I believe, were necessary changes for usability, and ASCII Sector is a very promising game. You can see the difference in look between the same ship in ASCII (the first image in the post), and the 3D version of the same ship (the second image in the post).
Now, when writing this post, I tried to look for pictures of the original game, and found out that the idea of resuscitating this particular game is not unique to that guy, with at least two other games in the open source: Privateer Gemini Gold, and Wing Commander Universe, both of which are Source Forge projects (though the second project seems to be undergoing a major overhaul). These two graphics games seem to be more true to the game dynamics of the original game, but what really makes ASCII Sector stand out is that it allows one to interact with elements outside the ship flight simulator, allowing one to wander around space stations and talking to people, including person to person combat, which allows for all sorts of interesting extensions, like boarding a ship and capturing (or killing) its crew. So as far as depth goes, ASCII seems to win, but who knows that the source forge projects might evolve into.