olsen

You are right in that it is basically stored as dots again (saved as a normal .jpg file) and yes you can gradient as much as you want to make it look natural. But the more colours you use in closer proximity the more difficult it becomes to resize without colours being affected, ever taken a pic and tried to reduce its size and the colours or edges hav gone really strange?

Bottom line is it is a style of drawing/manipulation with a particular effect and those less smooth colour gradients are the desired result (I know it sounds strange but...). That pic started as a normal photo and was reduced down to coloured areas for styles sake... just a popular fad at the moment.

I don't think anyone would steal your genius idea.