Originally Posted by
NorthernFocus
OK, here's a clue, does the problem show on your monitor when you open the RAW file in ACR? If no, then isn't it logical that it is not associated with the interpolation?
As a direct answer to your question, no, more available information (i.e. higher resolution, 16-bit, RAW format, etc.)always resolves better when reduced.
The 1-12 scale defines the "quality" aka degree of compression of the jpeg. Try different settings without resizing the original file. For example if you save the full resolution image at a setting of 12, the file size in MB will be substantially larger than the same image saved at a setting of 1. The image size isn't different but the file size is different. Both images have the same number of pixels but the one saved at a setting of 1 is compressed much more and will have more artifacts. If you continue to modify jpegs, the information becomes more and more distorted with each compression routine and more artifacts result.