If the ratio of the background is the same as the ratio of your phone's screen: yes. Best result will obviously be obtained with a background in the same screen size as the phone's display resolution.
Sure - the ratio of height/width will once change if the screen is stretched unproportionally.
I am not sure where the problem of understanding lies.
If the screen doesn't get scaled and your sprites are at 100% size and their top-left corner has integer coordinates (so not something like 0.5) and your sprite isn't rotated (except 0�, 90�, 180�, 270�), it will not get blurred.
If you enlarge the game's view (because it was designed for a smaller resolution), ofc you will notice some blur.
Nonetheless even if you scale, a 100x100 box will always appear like a square, and not a rectangle, since both height and width are scaled by the same factor.