I tried image smoothing, but no intermediate colors are displayed.
The attached image is the result of the form below.

(let ((xpm "/* XPM */
static char *data[] = {
\"4 8 2 1\",
\"  c #FFFFFF\",
\"R c #FF0000\",
\"   R\",
\"   R\",
\"  RR\",
\"  RR\",
\" RRR\",
\" RRR\",
\"RRRR\",
\"RRRR\"}"))
  (insert-image (create-image xpm 'xpm t :scale 1.5
                              :transform-smoothing t)))