If by "only later" you mean the original CSS1 spec in '96 then yeah. The web has been relative long enough that anyone who has ever hit "print" didn't have to worry about images being 1/6th the size of the rest of the page.

I don't see how broken interpolation/blending is a secondary outcome. That it works only at "native" resolution is a result of interpolation being broken not the other way around. If it was fixed you wouldn't be looking to use device pixels (again except for something like canvas rendering of a web image editor).