Yes. imagine that your set resolution and all its objects and chars in the displayed 256x144 window gets scaled up at once to fullscreen. Big pixels but lovely!
Your Character itself can also scale inside the scene so that he gets smaller in far away places and bigger if closer to the player/screen.
Because the "normal" resolution is 256x144 it uses this as the basis for the magnification and minification. So no "half of a pixel in the background is still visible when the character is scaled a bit down)".
The only thing to consider is that scaling the character inside a scene in so low resolutions looks kinda ugly... So keep in mind: the less pixels you make your game resolution, the less use character scaling because then you are controlling pixelchunks