This works well with high contrast images, i.e., a solid graphic on a light background. The example used here is of an Asian pictograph on a small JPEG file blown up ten times.
When you do this, you’ll find that what you’ll get is a large pixellated image with jagged edges. What to do to smoothen it?
The trick in Photoshop is to go to Filter > Blur > Gaussian Blur, setting the Radius to 10.
Then go to Image > Adjustments > Brightness/Contrast. Check the “Use Legacy†checkbox in CS3, and set both Brightness and Contrast to 96.
Then you’ll have a smooth graphic with no jagged edges and go to other directions from there. Altered Perspective has the tutorial on Flash video.
[Via: Altered Perspective]