Just to verify - yes, all the models in DF1 are 1", because they were based off of VillageWorks, which was all 1". The other reason was that the module was mainly designed for d20 and SW, so that's the scale most commonly used.
As far as scaling up goes, if you have Photoshop, you can enlarge the buildings fairly easily (well, it all depends on how detailed you want to go, really). The only real drawback at that point would be a loss in resolution - and unless someone's scrutinizing the models, it should be fine.
Good Luck!