All else should NEVER be equal. Both players should be properly calibrated individually, and it sounds as though you haven't done this.

I can't imagine any "night and day" scenario unless you are talking about the absolute best DVD players vs the absolute worst. Like the Denon 5910 vs the no-name $30 jobs at the supermarket. And even then I'll bet it isn't as night and day as either player vs a VCR.

All an upscaling dvd player does differently than a progressive player with a HDMI/DVI output is bypass the scaler built into a fixed pixel display device(i.e. plasma, lcd, dlp). What you have to consider is $250 dvd player verse $5000-7000 plasma or projector, which one most likely will have the better scaler? My guess would be the one that costs more, but you should still hook it up just to settle it in your mind.

The other thing to consider is plasma tv's that have a 768 line vertical resolution. Unless that upscaling DVD player has 1:1 pixel mapping, or has the exact resolution of that plasma, not just 1080, or 720, then the plasma is still going to have to use its scaler to get the image to fit. So instead of cutting down on processes by hooking up digitally and scaling prior to hitting the plasma, you are actually adding an additional scaling process to an already scaled image.

If you have the cheapest projector, Dlp tv or plasma you could get, I would say give it a shot with one of the lesser expensive upscaling players, but if you have a better television, should probably just stick with a same quality progressive scan player.