Hey Junk boy,
It's possible to do in PS with a bit of setup using smart objects. Lets say your canvas is 256x128 (stretched tall to 256x256)....
make a new document size 256x256
make sure document filtering is set to nearest neighbor
make a new layer, make a 128x256 selection, and flood fill
turn that layer into a smart object
rotate that layer 90 degrees clockwise, and transform-stretch the object to take up the entire canvas (final transform settings should be: W:200% H:100% Angle:90)
open up the smart object
rotate the canvas 90 degrees clockwise (using the rotate view tool, NOT rotating the image itself)
goto view->Pixel aspect ratio-> 2:1
If you've done everything correctly, you can start pixeling inside the smart object with a pencil brush with tall pixels. So long as you're zoomed in at least 200% photoshop wont be stupid and apply filtering while you're painting. In order to save the image or preview it at 100% scale, just save the smart object then go back to the root document. From there you can save out a crisp image.
It's a bit weird of a set up, I know, but if you prefer painting in photoshop it's probably still net positive. Being comfortable with your tools is far more important.
Here is an example document for you to check out. (CS6)
https://dl.dropbox.com/u/13350050/Junk/PSTallPixelsTest.psd
