Hello, the blurriness is due to the fact that the new P3D renderer is now based in OpenGL and a different texture interpolation mechanism. 

Now that does not work on processing 2.0b1 :(

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http://draconiansolo.wordpress.com/

Yes, hint(DISABLE_TEXTURE_MIPMAPS) disables mipmapping, but the textures are still linearly interpolated, wich can lead to blurriness if you draw an image at a size larger than its native resolution... I need to discuss with the rest of the devel team if an additional function/hint should be added to disable interpolation at all.

Talking about late replies... (sorry...)
9 months later...

1. import processing.opengl.*;
2. import javax.media.opengl.*;
3. PGraphics buffer;
4. GL2 gl;
5. PGraphicsOpenGL pgl;
6. void setup() {
7.   size(320, 240, OPENGL);
8.   noSmooth();
9.   hint(DISABLE_TEXTURE_MIPMAPS);
10.   ((PGraphicsOpenGL)g).textureSampling(3);
11. }
12. void draw() {
13.   buffer=createGraphics(width/8, height/8, P3D);
14.   buffer.noSmooth();
15.   buffer.beginDraw();
16.   buffer.background(0);
17.   buffer.stroke(255);
18.   buffer.line(0, 0, buffer.width, buffer.height);
19.   buffer.endDraw();
20.   image(buffer, 0, 0, width, height);
21. }

I guess this is the same issue marked for the PGraphics fitering for offscreen use.
I think this disabling interpolation thing could be really useful for processing, for using generated graphics, using small resolutions but large screen space with a pixely look, undersampling offscreen buffers to improve performance.

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http://draconiansolo.wordpress.com/