I will qualify this by saying that I have not actually seen MA running on an iPhone 4 yet.
MA on the Mac (and iPhone) is implemented using OpenGL, with a coordinate system that does not map directly to pixels on the screen. The textures used in MA for the iPhone/iPad are not specifically scaled down for use on a smaller screen (they are the same ones used in the Mac version of the product), so there should be enough detail for a 960 x 640 pixel resolution display.
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