No!
Is the text more blurry when you select a font size of say 20 instead of 12 in a word processing software?
no
Exactly the same here, osX uses bigger font size when you select bigger UI elements, but still uses the native resolution to its best.
Again, the scaling does not work at pixel level.
Ok, I know that images and videos do not scale at pixel level but I didn't know about text scaling like that. Do you have a source?
Anyway, that would still mean that other types of UI elements will look blurry. This is the reason in the first place why Apple had to introduce the HiDPI mode.