i was going to add this as a comment, but i want it to be properly quoted and footnoted.
The Mangifier accessibility tool in Windows Vista used to be WPF aware. If you zoomed WPF content you would see a sharp magnified version of the app - demonstrating that WPF is indeed vector based.
Tim Sneath, a technology evanglist with Microsoft, blogged about this in 2006:

6/25/2011: Original image gone. Replaced with another image showing same effect.
Greg Schechter answers some commenters on this blog, explaining that magnifier no longer has this trick. Magnifier would specially detect WPF applications, and know how to ask them to render themselves scaled. They removed a dependancy on WPF in magnifier. It seems that magnifier had a dependancy on something in WPF that they wanted to take away or depricate:
Both 'bp' and 'Joseph Cooney' have
noticed that magnification of WPF
content using the built in OS
Magnifier no longer does resolution
independent zoom of content.
That observation is correct.
As a result of a series of changes
that are too numerous to describe
here, the OS magnifier is no longer
"WPF-aware", and does bitmap scaling
just like it does of other content.
Although we do lose this feature, we
believe that without the dependencies
that enabled Magnifier to work in a
WPF-specific way, we can be more agile
in what we provide to WPF customers
moving forward.
Note that the above is only about
out-of-process magnification. When
you do zooming (via scaling) within
your own WPF application, the
rendering continues to be
re-rasterized at the higher scale, so
everything remains smooth in that most
common scenario. This change is
strictly about using the external
magnifier.
So the magnifier used to have it, but no longer.
In the the Channel 9 video "Greg Schechter: Windows Presentation Foundation(WPF) Architecture", Greg Schechter talked about how Magnifier used to provide this functionality.
Magnifier and DWM worked together. Magnifier modified the DWM scene graph to make it's client area actually point to the desktop root of the scene graph. DWM then knew the magnifier was there and knew how to avoid that horrible "pointing a camcorder at a television showing the camcorder" effect.
Edit: 9/7/2018. From Ian Griffiths' answer:
Back when Vista first shipped, and when WPF was on version 3.0,
zooming with the built-in magnifier would actually do vector-based
scaling.
This stopped working when WPF 3.5 service pack 1 shipped. (It worked
in 3.5 before sp1.) The reason it worked before then is that the DWM
(Desktop Window Manager) - the part of Windows responsible for
presenting everything you see on screen - uses MILCORE.DLL to do its
rendering. Version 3.0 and 3.5 of WPF also used this same component to
render - this meant that all WPF content was native content, so to
speak. (In fact, on Windows XP, which doesn't have the DWM,
MILCORE.DLL is something that WPF puts on your system for its own
benefit. But it's built into Vista and Windows 7.) When WPF was using
MILCORE.DLL to render on Vista, any effects applied by the DWM such as
scaling would also apply in the way you want to WPF - it really did
scale without pixelating.
Unfortunately, this is no longer the case. And the reason is that WPF
started adding new rendering features. In 3.5 sp1, the new feature in
question was support for custom pixel shaders. To enable that,
Microsoft had to release an update to the MIL. (The Media Integration
Layer - the bit that does the actual rendering.) However, they weren't
really in a position to update MILCORE.DLL, because that's part of
Windows - it's how everything you see on screen gets to be on screen.
Releasing a new version of MILCORE.DLL effectively means pushing out
an update to Windows. The release schedule for Windows is independent
of that for .NET, and so the only way the WPF team could reasonably
add new features was to ship a new MIL. (In theory they could have
done it via Windows Update, but since WPF is now owned by a different
division of Microsoft than Windows, that sort of thing doesn't seem to
happen in practice.)
As of .NET 3.5 sp1, the MIL is in a different DLL called
wpf_gfx_vXXXX.dll where vXXXX is the version number. In .NET 4.0, it's
wpf_gfx_v0400.dll.
The upside is that WPF gets to add new rendering features with each
new version, without needing Windows itself to be updated. The
downside is that WPF's rendering is no longer as tightly integrated
with Windows as it was briefly back when Vista shipped. And the upshot
is, as you've seen, that magnifying is not as much fun as it used to
be.