Spectrum analysis : how to represent FFT results
Actually, what do the squared magnitude FFT result represent? They represent the total energy in a given frequency bin. So to downscale your results to less bands, you can sum them. It's not even necessary to average the results - however it would have the same effect, as you map the results to an image, thus rescaling them.

However, note that if you need to rescale by something else than an power of two, you'll need to do it using supersampling, as the results won't map directly to your new bins.