Have not done this before, so obviously I suck at it. Here 64 pixels around current mouse position get drawn little bigger on a form. Problem is, that it's 'kind of' to slow, and I have no idea where to start fixing.
Besides that, I made a thread, that constantly calls update graphics when it's finished and a little fps like text, to show really how fast things are drawn.
Image example: (Image is from letter 'a' in Eclipse)

Code example :
@SuppressWarnings("serial")
public static class AwtZoom extends Frame {
    private BufferedImage image;
    private long timeRef = new Date().getTime();
    Robot robot = null;
    public AwtZoom() {
        super("Image zoom");
        setLocation(new Point(640, 0));
        setSize(400, 400);
        setVisible(true);
        final Ticker t = new Ticker();
        this.image = (BufferedImage) (this.createImage(320, 330));
        addWindowListener(new WindowAdapter() {
            public void windowClosing(WindowEvent we) {
                t.done();
                dispose();
            }
        });
        try {
            robot = new Robot();
        } catch (AWTException e) {
            e.printStackTrace();
        }
        t.start();
    }
    private class Ticker extends Thread {
        public boolean update = true;
        public void done() {
            update = false;
        }
        public void run() {
            try {
                while (update == true) {
                    update(getGraphics());
                    // try {
                    // Thread.sleep(200);
                    // } catch (InterruptedException e) {
                    // e.printStackTrace();
                    // return;
                    // }
                }
            } catch (Exception e) {
                update=false;
            }
        }
    }
    public void update(Graphics g) {
        paint(g);
    }
    boolean isdone = true;
    public void paint(Graphics g) {
        if (isdone) {
            isdone=false;
            int step = 40;
            Point p = MouseInfo.getPointerInfo().getLocation();
            Graphics2D gc = this.image.createGraphics();
            try {
                for (int x = 0; x < 8; x++) {
                    for (int y = 0; y < 8; y++) {
                        gc.setColor(robot.getPixelColor(p.x - 4 + x, p.y
                                - 4 + y));
                        gc.fillOval(x * step, y * step, step - 3, step - 3);
                        gc.setColor(Color.GRAY);
                        gc.drawOval(x * step, y * step, step - 3, step - 3);
                    }
                }
            } catch (Exception e) {
                e.printStackTrace();
            }
            gc.dispose();
            isdone = true;
            iter++;
        }
        g.drawImage(image, 40, 45, this);
        g.setColor(Color.black);
        StringBuilder sb = new StringBuilder();
        sb.append(iter)
                .append(" frames in ")
                .append((double) (new Date().getTime() - this.timeRef) / 1000)
                .append("s.");
        g.drawString(sb.toString(), 50, 375);
    }
    int iter = 0;
}
Changes made: 
* added "gc.dispose();"
* added "isdone", so redraw could not be called faster, then it should.
* added this link to thrashgod source rewrite 
* added this link to thrashgod source rewrite 2
 
     
    
 
     
     
    