This is a response I got from Julien Scirra via email when setting downscaling to Medium fixed my red loading bar (was set to High originally):
We have indeed had users having issues recently with this new property that was added not that long ago.
You can read a bit more about it and its impact in this manual article.
It all comes down to memory usage, and thus should make sense as why it could prevent the game from loading in the first place.
If you feel that your project should still be able to load and execute despite those case, we may investigate it and optimize our engine further.
Here's the manual entry he's referring to:
When exporting, Construct 2 runs several optimisations including spritesheeting to save memory. Setting the Downscaling project property to 'High quality' forces spritesheeting to pad out all sprites to power-of-two sizes, negating the memory saving of spritesheets. This can significantly add to the memory requirement of your project. Since 'High quality' mode exists only to address two relatively minor rendering issues (edge fringing on sprites, or altered quality on the last animation frame), it should not be used unless one of these rendering issues has been specifically observed and the issue is resolved by choosing this option. Otherwise your project will be paying a very high price in memory usage for no reason.
tl;dr -- high quality should ONLY be used if you see unfixable issues with medium quality.