DVD Upscale via RGB Component - Question

I recently bought the Sony Dvp-ns76h,

i connected it up to my HD TV via HDMI cable, but i was having major letterbox problems when playing certain DVDs, i know it may be the correct size to view and to stop my moaning, but because i only have a 26" TV for my bedroom, it annoyed the hell out of me.

I then connected it up using a RGB Component cable which outputted at 576i (576p looked awfull), this showed the picture quality as good as any setting i used on the HDMI cable ... even 1080i, this also removed the annoying letterbox from all movies (without any zoom / bad quality).

Question:

By the sounds of it my TV is doing all the upscaling,... surely if i buy a much cheaper upscale player with RGB Component out, the TV will do all the upscaling work once again and i will be getting the same quality but wont be paying ?00?

In other words, even if i connected a ?0 Tesco upscaler via RGB Component my TV will upscale to just as good quality as this Sony at ?00?

In even simpler words, I just want to know if this ?00 Sony DVD player is contributing to the great picture quality i have or will all DVD players output the same picture quality at 576i?

thanks ;)