No. Group 3/group 4 compression of a fax is bi-level.
Now, you can use it for [link|http://desktoppub.about.com/library/weekly/aa090600a.htm|halftone] images. But any given pixel is either black or white. Your eye and brain integrate the pixels over the local area to see grays. This is exactly what you have in a newspaper picture. On any given spot you either have or not have ink. The local ratio of black to white in an area gives you the effect of grays.
Pull out your magnifying glass and take a close look.
Alex
"I have a truly marvelous demonstration of this proposition which this margin is too narrow to contain. -- Pierre de Fermat (1601-1665)