toolmanx 0 Light Poster

I don't know if I am the only one having trouble with StretchBlt
or if my symtom is a normal situation.

StrechBlt works fine as I zoom the picture larger. I expect the
pic to loose quality if I zoom out too far.

My problem is: As I zoom smaller, the picture quality drops off and
the colors start to bleed into each other. At 1/3X the pic is

I am using COLORONCOLOR. I played around with HALFTONE but I didn't
see any improvement. I called SetBrushOrgEx with lppt set both to
the 0,0 point and NULL. Again no difference. I have to admit I don't
know all I need to know about setting SetBrushOrgEx.

My question is-- Is this normal or am I doing something wrong?