HUDText is an NGUI extension, so it will work with an NGUI label. NGUI labels can use dynamic fonts or bitmap fonts, and you can make them look pixelated if desired by using an appropriate font.
That said, HUDText displays text, not speech bubbles. While you can certainly add a bubble around the text by using NGUI's existing functionality such as the EnvelopContent script or simply using anchoring, you would need to modify HUDText to attach background widgets to each label if you were to go that route.
The text will scale if you use a 3D UI or adjust the ortho camera's size -- but keep in mind you will lose crispness when doing so. It's best used with a flexible style 2D UI.