Step 3: Fine tuning
If the pixels are too large, you have shrunk the selection too far. If you think they should be half the size, only shrink half as much.
If the pixels are too small and they don't obscure the image enough, the selection needs shrinking more. As above if you think the pixels should be twice as big, shrink the selection twice as much.
This is more subtle:
You'll notice that in this series of images the guy on the right loses an eye. The original selection was 71 x 72 pixels reduced to 8 x 8 pixels - Paint has rounded 7.1 x 7.2 pixels up. When this was stretched back the selection ended up as 80 x 80, a little over the original size.
This is why the dimensions of the selected area are important. Look to the lower right of the Paint window as in step 1, and select 'round' dimensions which will scale back easily.
All this being said, the effect still worked.