I think I know what it is!
He took the 256x256 and blew it up to 1024x1024, then he re-traced the panel lines...
Only...
He retraced exactly as the blown up 256 ones looked, "steps" and all.
Spade, when you take a 256 and blow it up to 1024, when you want to make the panel lines you might avoid step patterns like that by making a new layer, selecting the "line" tool, setting it to 1 pixel, and drawing a line from the point where it should start to the point where it should end. The line tool fills in a straight line between the two, thus avoiding as many steps as you can, and making the line look a lot cleaner, and realistic.
You can play with antialiasing, but I have so far left it off (I'm going to play around with it on my next skin)