The game is rendered in a resolution of 640 x 360, and then scaled to different zoom levels / stretched to fit the screen!
The "pixelation" effect you talk about is actually a necessity to make the portraits fit on the screen at all. Vilya basically draws them in super hi-res first, then downscale them to their in-game size (about 100 x 100). When the portrait is in its final size, she'll touch it up a bit and then they're put into the game.
With zoom levels above 1x it would theoretically be possible to have separate versions of the portrait that are more hi-res (by rendering them after the current final pass), but it would be pretty cumbersome to add and maintain, and a lot of people find it quite jarring when hi-res art is displayed next to low-res art as it exposes the pixels!
Which portraits do you mean weren't pixelated before? They've always received the same treatment in terms of scaling, but Vilya has changed the style a couple of times!