Facer creator displays co-ordinates with reference to a 320x320px square. However, I would have thought that the final resolution would be determined by the target watch ( some of which have higher resolution than 320x320 ).
In any case, all current watches have resolution way less than 2000px so your images will have to be reduced at some point.
In my case, all of my watch images start with quite high resolution ( ie. > 2000x2000px ). Instead of relying on the in-built decimator/reduction filter, I reduce all my images myself in a graphics program where I can control the parameters and check the result. I then upload my images into Facer creator at no higher than 640x640px ( I seem to remember that that is the recommended resolution (?) ).
With regard to your hands; are you saying that you increase their dimmensions after loading them? If so then instead, you can remove some of the white space around the hands before you upload them (ie. crop the images to make the hands a larger proportion of the image). This will make them "larger" when you upload them so you won't need to stretch them after uploading. I hope that makes sense