It's still a 480p signal. The only way it will ever look as sharp as a 1080p native source is if you have the component Wii signal running in PiP mode in the corner. It's still 1/6 the resolution no matter how you upscale it.
For older systems, it is possible to get good, sharp, pixel for pixel output through a computer based capture board system similar to those used for screen captures for print publications.
The real limitation is the output cables for most older systems. The real old ones only have coaxial output (tough to even find a capture board with a coaxial input), SNES era consoles had RCA output with premium cables of the time outputting an S-Video signal. Most capture cards have S-Video input, which provides a pretty clean signal. Component output didn't commonly exist until the 6th Gen of consoles.
It really depends on whether you prefer the look of a native resolution (sharp, but pixelated due to the limits of the source resolution) or an "upscaled" image that is simply composed of interpolated data not generated from the original native source.
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