Pixel artists will probably use nearest-neighbor scaling to display their art on high-resolution screens (so one pixel would become a sharp 3x3 block of pixels, or 4x4, 5x5, etc). That is already the technique being used to create games with an “old-school” aesthetic on modern gaming consoles.

I don’t think that drawing 1920x1080 (or larger!) images pixel-by-pixel will ever be practical, and it probably wouldn’t even look like pixel art to the eye at that point.

Using a vector representation may be a more practical approach as retina-style screens become more pervasive. Microsoft Research has an interesting paper on this from last year's SIGGRAPH: http://research.microsoft.com/en-us/um/people/kopf/pixelart/

That said, once you switch over to more advanced scaling, the artist loses a lot of the fine control over the result that can really make pixel art shine.

The technique in that paper kills the effect completely. Its a way to de-pixel the pixel art. Also, vector representations quickly become much more CPU intensive. Would be more efficient to scale the pixels as suggested above.

I think it would be an interesting and awesome project to make a 3D renderer that generates 256-colour(per scene? per frame) graphics in this style. Perhaps it could be done with shaders? Imagine playing through Skyrim and it looking as pretty as this?

It already exists, it's called toon shading http://en.wikipedia.org/wiki/Cel-shaded_animation and it was used also in a commercial game called XIII http://en.wikipedia.org/wiki/XIII_(video_game)

Maybe something like this http://www.crcnetbase.com/doi/abs/10.1201/b10648-3

I also think it looks awesome. It even has a soothing effect on me.

(I would also like to play old adventure games like Full Throttle & Grim Fandango on the browser.)