There's no issue with enlarging the template first. Yeah, you get some blurred lines, but that can easily be worked around. You use the outside of the lines on the edge of the template and the center of the ones in the middle

here is a skirt that was textured with the original temple of 500 and one enlarged in Paintshop Pro to 2048. The second is much clearer. It's more noticeable if you view the image at full size.

and here, you can see a closeup of the island edges to show that there isn't any of the template background peeking through at the edges.

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