Is it possible to increase the font size in iTunes?
It is possible to to change/customize every font/font-size within iTunes.app, that is used for the menu, pop-up dialogs, view-field etc..

In order to do so navigate to /Applications/iTunes.app/Contents/Resources/English.lproj and make a backup of Localized.rsrc first, just to be on the save side.

Then download ThemePark3.1 in order to open and edit the Localized.rsrc file. Once you edited the font(s)/size to your liking, you need to save your changes from within ThemePark. 

It might be, that you also need to reboot first to see the changes!!





Edit:
There is also an iTunes.rsrc file under /Applications/iTunes.app/Contents/Resources/ which might be of help and lately .css stylesheet-files are being used for theming as well (in Linux (GTK3). 

If that is also true for 10.7 (still running 10.6.8, therefore can only guess), please confirm this information!! Basically "simple" images can be drawn and rendered from code instead of using single image files, in png, tiff, jpg - format.

Those .css files also manage font information, like font-style, color values, size etc...