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What is your evidence for this? A surface may look more or less smooth at different scales and different resolutions: that would be an artifact of display and discretization, respectively. But it will be the same surface regardless of the units of distance.
The reason I am sceptical of this claim is that when the distance units change, all distances are multiplied by some constant r (such as 1/1000 when converting from meters to kilometers) This multiplies all weights by r^(-p) and that factor cancels out in the formula, whence the interpolated values do not change at all.
Please notice, too, that a change of "units" between meters and decimal degrees is not actually a change of units: it is a projection or unprojection. This nonlinear transformation of locations will necessarily cause the IDW interpolated values to change.
There's always the possibility of a bug in the calculations, but that's the last thing to consider, after other plausible explanations are ruled out.
Jamal
Spatial Analyst and Geostatistical Analyst use the same equation for IDW, please see page 114 in http://dusk.geo.orst.edu/gis/geostat_analyst.pdf
If you have anymore questions regarding this equation then please email me at slynch@esri.com
Steve
That's not for IDW to do. Instead, you need to compute a distance grid for each source location and use Map Algebra to calculate the w(i) from those and form the desired linear combination. Distance grids can be computed in any way that is appropriate: using CostDistance to approximate travel times, for instance, or even just the Euclidean distances.
The first shows an application of the second.
(It is noteworthy that these formulas do not require that the locations be distinct: the calculation works just fine, and makes perfect sense, even when multiple values are available at some locations.)