There is no upscaling. The picture is just being transferred through an HDMI cable rather than the AV/Component cables.

You might have missed a setting somewhere if it looks blurry in Wii Mode. I did hear that its supposed to look crisper and more vibrant and everything because of the HDMI. (dunno really, that part kinda confused me..Heard other things like it does render/upscale hem to 720 or something, lol)

did you actually try to test if the wii u upscales before posting? HDMI alone couldn't account for the difference in picture compared to component if both were outputting at 480p and every user who's checked has confirmed that their TV displays 1080p as the signal resolution when playing in wii mode. that wouldn't happen unless the signal were being upscaled. read all about it here if you want: http://www.nintendolife.com/forums/wii-u/wii_mode_upscales_to...

here's a shot showing the difference between guitar hero on wii vs wii u from that thread:
wii: http://i.imgur.com/9DWY4.png
wii u: http://i.imgur.com/R5A0Z.png

It's not exactly rocket science to upscale 480p to 1080p, a $30 DVD player can do it. The only reason it should come as a surprise at all is because Reggie misspoke and said there would be no upscaling when he really meant there would be no uprendering/up-res-ing. I'm 100% sure it does upscale, there's absolutely no reason to believe it doesn't.

He must have misspoken. I was under the assumption it didn't and I apologize.

The subject was whether wii games would look better on wii u, so I think he instinctively thought the question was whether wii u would do what dolphin emulator does and quickly said no.

I haven't played Wii games on the Wii U yet, but I really want to see how Super Smash Bros. Brawl and Donkey Kong Country Returns look on it.