blitzcraig,
"Is there a better way I can scale image for my picture display?"
Yes, the best way to scale the image would be to use "IMAQ Resample.vi". This VI comes with the Vision Development Module. If you already have the Vision Development Module, then you should be good to go. "IMAQ Resample.vi" allows you to select four different types of interpolation, "Zero Order", "Bi-Linear", "Quadratic", and "Cubic Spline".
I can't say for sure (I would have to check with R&D), but the Image Display's zoom out probably just removes every other pixel when zooming out, thus creating the bad image. Using "IMAQ Resample.vi" does a much better job. And... "IMAQ Resample.vi" will allow you to resize the image so that it fits perfectly inside your Image Display (no matter the size of the display).
If you do not own the Vision Development Module, then you have two options...
1. Buy the Vision Development Module
2. Convert your image to a 2D array and write your own resampling algorithm and then display the image on an intensity plot. If you just display the image on an intensity plot and zoom out, you will find that you are going to have the same issues that you were having before.
Writing your own resampling algorithm is not impossible, but might be a bit messy. I am sure if you google "resampling" you can probably come up with some info on different ways to implement resampling. The downside to this option is that...
1. You have to write you own algorithm.
2. The intensity plot is not very fun to work with when trying to display images (compared to the Image Display).
I hope I answered all of your questions,
Lorne Hengst
Application Engineer
National Instruments