Actually, it's super sampling, and doesn't affect the texture size (honestly, do you think the PS2 version supports textres at 2048x2048 native?).
If you run the game at, let's say 1280x1024, and then run the background at 2048x2048, it will super sample down, giving the apparent effect of anti-aliasing.
Let's say you run the game at 1024x768, and the background at 1024x1024. By setting the background to match your foreground (1024x768), you'll lose very little in quality (not a gain, like was suggested), but gain a decent chunk in performance.
http://www.soulsofhonor.com/forums/index.php?pg=tweak
EDIT: Updated the website URL, as we've moved.