Rescaling from 1024 x 768 up to 1600 x 1200 should be fine. We use a high-quality scaling system, both when scaling up and when scaling down.
Regarding DPI - internally ArtRage just works at screen resolution - all in pixels. When we export to a Photoshop PSD, we pretend we were working at 72dpi, because that's typical for Windows and Macintosh screen resolution.
In reality, you probably only care about DPI whe you're printing out. ArtRage ignores the DPI of the printer, and just scales the printed image to fit the page.
If you want more advanced control over printed output and DPI, you're better to export the painting as a .psd, and take it into another application that has more advanced control over printed output.
AndyRage's mantra for graphics engine code:
"Sure - how hard can it be?"