I'd wondered about something like this in the past (I'm an Art Director & Designer who does a lot of advertising and catalog work for Swiss Army) but never played with it. Still, it seems to me like it shouldn't do a better job than any other interpolation...
Process: Duplicate, free transform to reduce the duplicate's scale by 1 pixel (as ennacac said, does the direction matter?), repeat this for another, desaturated layer duplicate of the original... should both of the duplicates be set to "soft light"? What opacity?
I'll also echo kmccanta:
Originally Posted by kmccanta 
I dont understand. If your microscopic shift is less than a pixel, that means you are creating new pixels interleaved with the originals. Isnt this upsizing?
In other words how can you shift by less than a pixel unless you upsized to define the intermediate pixels to begin with??
I guess I dont understnad how to do this either...
Thank you sir!