On re-reading the rules, it does now say "or whatever resolution you prefer if not using pixel art style graphics", so I think you'll be okay. Mind you, the compiled html file will be huge after the images are converted to base64.
You don't necessarily need to base64 graphics. You can reference an external file. I'll put this in the cookbook tonight ...
Essentially it's like this
graphics {
// The png file will be read from the same path as the game html file
blah : png "mypngfile.png";
}The catch is that it's not possible to test it (currently) using relative paths in the web based editor. You need to compile it and run it from the same base folder as the assets to see the images in-game. When you upload to itch, you can upload a zipfile containing your html and all assets, and it will just work. This can be a nice approach for games with larger files, or with a lot of mp3 sound files.