Pixelated decals only when rendered?

You probably should bump the texture baking quality in the Rendering panel under Advanced Render Settings.

This will be necessary to do until I get RH-45742 Implement Raytraced native decal support landed in 7.x.

You’ll then get even sharper quality than in Rendered mode. Here a screenshot of the work for RH-45742 I took yesterday night. Raytraced mode is the same rendering engine as Rhino Render in v7.