The Scan Converters from my experience don't offer very good quality output ... though the last time I used one was years ago in High School.
Before you write off video out though, I'm using a 32" TV, w/ an ATI All-In-Wonder Radeon 7500. Got S-Video out going to the TV, and I've got the resolution set to 800x600. Text is very readable, I've done numerous posts on this board using that computer, and have used it to play video games, and dvd's with no problems. Even if text looks like shit, DVD's were meant for the TV, and TV out from your computer would still look excellent when playing DVD.
If I bump up to 1024x768, the text blurs a bit, but is still readable for the most part. I just keep it on 800x600 as that's closer to native NTSC resolution (720x480) ... and I've heard there are ways to make your video card display at non-standard resolutions (like 720x480). Whenever I decide to research that further, I'll probably set my resolution there. I was running it at 640x480 for a while, and the text was just that much more readable.
About the only time I'd switch to 1024x768 was when I use Gordian Knot ... but I just used it last night, and it fit perfectly in 800x600 ... so guess I don't need to switch that anymore
Now, composite/RCA out ... that looks like ass. At least for text. It's only readable at 640x480, and barely at that.