1. A system for scanning a target of interest in a scene comprising: a high-resolution collecting optic; a spatial modulation reticle located in a high-resolution image plane of the collecting optic, the reticle being a temporally varying pattern in the image plane; a demagnifying relay optic; a primary small-format focal plane array (FPA) detector located in the demagnified image plane that receives reticle-modified images and outputs image frames; and a processor that performs, with the image frames, a balanced demodulation function that reduces image clutter by compensating for the effect of movement of the system relative to the scene, wherein the balanced demodulation function utilizes differences between image frames and averages of image frames.