I don't have all of the answers, but I'll share a couple of things.

The upscaling is all right--better than no upscaling--but I still prefer my Toshiba HD-A1 for watching DVDs. However, some days I'm listening to SACDs, then feel like putting in a DVD, but I don't want to wait for the Toshiba to boot up, so I watch it on the PS3. I don't feel like I'm missing out TOO much.

I use it as my CD player almost all of the time. I can't tell a difference between its CD playback and any other player I've ever owned.

I've only ever had it hooked up via HDMI, so I can't help with your component video questions, and I also don't have any PS2/PS1 games. I'm not sure if they get upscaled or not. If I recall correctly, they're not, unless it was part of a more recent update and I didn't see it slip through.

Oh, and it doesn't play back DVD-Audio discs any more than a regular DVD player will. It will play the Dolby Digital or DTS, but not the advanced resolution portions. Yes, you need the audio to go through HDMI for SACD playback.

Hope I've helped a little!