Well, the number 704 isn't really chosen for any reason other than what we like the view distance to be.
Here is the code that sets the scale:
if (WorldDrawer.RenderSettings.LetterBox)
height = (int)Math.Round(width / (16f / 9f));
Width = width;
Height = height;
var idealScale = (height + width) / 44;
if (width / (float)height > 2.5f)
idealScale = height / 16;
int scale;
var scales = new[] { 16, 32, 48, 64, 80, 96, 112, 128, 144, 160, 176, 192 };
for (scale = 1; scales[scale] < idealScale; scale++) ;
if (Math.Abs(idealScale - scales[scale]) > Math.Abs(idealScale - scales[scale - 1]))
scale--;
cam.ScaleFact = scales[scale];
So I set the ideal scale to be "(height + width) / 44", then I adjust it to get an even multiplier of the pixels so that we can have pixel-perfect rendering. That 44 gets multiplied by 16 in the render code since 16 is the scale that the sprites are at (and 44*16 is 704). So changing that zooms the camera in or out and we just set it to whatever we thought was good.
This breaks at weird aspect ratios which is why I added the "if (width / (float)height > 2.5f)" check.