PS2 games upscaled by PS3 could be amazing, too bad it introduced severe lag in the process, but that could be the product of interlaced/progressive conversion more than of upscaling itself.
A pure digital signal (hdmi) from source to display like it happens on WiiU will produce a way better picture than a signal that goes from digital to analog sampling (component) and than to digital reconversion again to be displayed. That's a fact.
So the questions are:
- How much does it lag?
- Is the underscan undefeatable? Even if this could be that in 1080p, the tvs of the users that reported the thing simply default in exact scan 1:1 mapping (which is the case for standard non-underscanning games), and so this issue can be avoided adjusting the overscan setting.