So FCPX's scaling ability is kind of crappy.

Just for fun I tried and it just makes it look worse. FCPX's scaling algorithm just looses too much detail and detail can't be restored by sharpening (which basically just adjusts contrast on the edges).

Also, Just for fun, What are peoples experience with hardware up-scaling? I've used AJA Kona 3G cards to success. Any other thoughts?

I've never tried an AJA card and I doubt it would work for what I'd need it to do (someone correct me if I'm wrong).

But there is hardware that can do the upscaling externally before capture. It can be very good depending on which scaler you use. Faroudja makes some nice stuff if you have interlaced sources. But the XRGB-mini from Micomsoft (sold in Japan only but you can import it) does a much better job for progressive signals from old game consoles that output 240p instead of 480i. There's also the XRGB-3 and XPC-4, both also from Micomsoft and Japan-only which do similar things for different sources. Unfortunately I'd have to convert my 480p used in this example here to VGA before I could use the XPC-4 to upscale it to 720p. I don't have a way to do that. But the Micomsoft stuff is pretty incredible in their quality. Much better than Faroudja.

AJA and BMD don't do hardware upscaling as suggested. You can't have them upscale media you already have on your drive. But they "may" be able to ingest a "live video feed" from another device. And even then, to go from SD to HD will NEVER give good results. Simply defies physics.

Depends on your definition of "good". Accurate representation of the original signal? That's what I consider good. The XRGB-mini is quite good. Excellent, in fact. Here's an example . Be sure to look at it at 100% size.

I do a lot of this kind of stuff and there is a very large market for it. Videogames is a bigger industry money-wise than movies. So I demand my NLEs handle everything at the highest quality level, not just camera video. Unfortunately most people who develop stuff like NLEs and whatnot give games the cold shoulder. They really shouldn't.