So what is the verdict, Is it possible (in real life that is lol)? Thought you said to some extent you can increase the resolution losslessly?
Well, it isn't really possible (technically, standard image up-sizing
is lossless, but I assume you mean for it to retain quality), except in specific cases. One of those cases is vectors, because they are defined by paths and shapes, and they are designed so that they can be scalable and retain the same general shape.
With that in mind, you might think: why isn't everything a vector? Can't you make it a vector?
There are many answers to that. Vectors often contain additional info and require particular programs to create. Your every day photo won't be a vector. It is possible to "vectorize" images that already exist, but it won't quite be the desired result. See this:
http://en.wikipedia.org/wiki/Vectorization_(image_tracing)
It shows comparisons of vectorization tools on an image. Sadly, you can't upsize without some sort of instructions on how to do it--otherwise it just becomes guesswork or uses a generalized algorithm. e.g. When you are browsing on an iPad or iPhone, you can zoom in an abnormal amount onto the text without any noticeable quality loss. There are clear instructions on how to resize text. However, for any general image, they have to resort to a general method.
In the end, there might be some technology/algorithms in the future to improve the guess-work and the overall quality, but I don't see it being possible to get an arbitrary image and upsize it without it looking weird or blurry.