I think the method your hearing about is this: using 3d hardware to draw polygons with texture maps on them instead of plain old sprites. This allows you to use all the features 3D hardware lets you use (Alpha Blending, Shading, etc.), while not having a huge affect on performance (drawing 20-50 polygons isn't going to be terribly slow, heck, even 100 wouldn't be too bad).

Sadly, youll need to learn Direct3D (or OpenGL) to do this. Luckily they aren't too hard to learn, but unless you absolutely need these features I'd just stick with plain DirectDraw.

--TheGoop