So I must create art for a game in the form of isometric tiles. My aim here is some kind of Bastion-esque style of hand-paint. I know how hard that is, that is not the problem; i believe i have the tools to achieve this. The problem is that I'm not sure how I can pull this off.

The tile here is taken from a spritesheet with 256x256 tiles in it, the isometry ratio is 2:1 so i end up with a 256x128px diagonals square.

Needless to say it doesn't look good (regardless of the fact that it lacks detail.)

What's the best approach to keep the quality? Bicubic Sharper doesn't seem to help so I believe i shouldnt be doing it at all. Should i begin with a big 2000x2000 version and then size down? should i try to get it right from the original size? i think it looks too pixelated. Or maybe Bastion uses a system in where tiles are actually bigger but are scaled down at running time?

I'm not good with that kinda stuff so I'd appreciate any help.

Thanks.

Try Lanczos to downsize? It has always given me the best results for downsizing (by eye at least).
http://en.wikipedia.org/wiki/Lanczos_algorithm

Irfanview(free) has it as a rezie option. Not sure about Photoshop.

I'm always out of the loop with indie games; now that you mention that Bastion... holy cr*p that game looks good.

[rollup='Bastion - Screenshots']

[/rollup]
I don't think it's a good idea to test scaling methods on an unfinished tile... you already know it doesn't look good, so you already start biased.

What I would do: finish rendering that tile; painting light, volume, color and texture to it, and when it's production-ready I'd be able to properly tell if it looks good or not when up\down scaled.

EDIT: That is, if Bastion even uses tiles. Judging from those screens it seems they painted the whole map as one unit. Too much variation and detail for any tile methods to compensate. There must be some tile logic under the hood for collisions and pathing to work, but the graphics themselves I think are represented by a single element (or at least whole layers, for some overlay and depth ordering effects).

That image looks fine to me. I'm not sure what the problem is - if you only have 256x128 pixels to play with then obviously you're going to see some pixels here and there. If you do need to downscale then it's best to go with a bigger image on a purely mathematical level but if you work at too high a resolution then you're going to end up painting in detail that is only going to be lost.