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Follow up, I still haven't found the ideal solution, which is pixel-perfect scaling.

Changing the sprite filtering to smooth instead of pixelated stops the distortion, but it's also very blurry looking. With pixel art, this looks like hot garbage, but if you use higher resolution assets, it's fine.

Also, when the sprite's transparency is set to Opaque, it looks really bad, but it's fine with transparency on.

But it looks pretty okay and doesn't have the ugly distortion issue, so... I guess it works?

My conclusion: When it comes to Superpowers, 256x256 is 8 times better than 32x32.

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Would you mind sharing your project or at least one with the specific problem? that way i can replicate the result and see if i can help.

Here's a quick thing with a tileset made to be 16x16, at 16x16, 32x32, and 64x64 for scale.

I'm using 1.1.0, the portable version as packaged here, but the problem also exists in 0.19, 1.0.0, and 2.0.0.