The problem is that you're drawing text at one size and scaling the result up. Once you've determined how wide you want the text to be, you should use calls to Paint.measureText(), adjusting the size via Paint.setTextSize() accordingly. Once it measures correctly, then you do your call to Canvas.drawText().
An alternative would be to not measure the text at all and just immediately call:
paint.setTextSize(paint.getSize() * scale)
There's no guarantee the text will fit in this case, though.
None of your other transform calls should result in interpolation, so it should give you very sharp lines.
Edit
Here is a code sample and comparison screenshot:
canvas.save();
canvas.scale(10, 10);
canvas.drawText("Hello", 0, 10, mTextPaint);
canvas.restore();
float textSize = mTextPaint.getTextSize();
mTextPaint.setTextSize(textSize * 10);
canvas.drawText("Hello", 0, 300, mTextPaint);
mTextPaint.setTextSize(textSize);