We have to wait and see, maybe we'll get a decorations layer. But yes, I believe the powder toy pixels aren't as small as real ones, looked at the forum border, one pixel wide, seems too thin for me.
i posted a screenshot of it somewhere... http://img705.imageshack.us/img705/126/screenshot18i.png EDIT: i've done more work since then, so it will get better, any suggestions appreciated. anyway, the pixels are the same size lol. unless you are in scale:2 or kiosk, they may be different then.
It doesn't "paint" particles mind. It's really more of a decorative masking layer that doesn't interact with the particles in the game. That way you can hide stuff, you know, without huge signs.
You can also make awesome signs with this. All I have to say is thank you for making The Powder Toy better all of the time. The next update is going to be one of the best ones to date.