I know for a fact that performing a software upconversion on a 4:3 letterboxed DVD to re-encode it to 16:9 (anamorphic), if done right (e.g. TMPGEnc Xpress with the right deinterlace and resize settings), can produce a final result which looks better on a CRT TV than just using the same 4:3 DVD and relying on the TV's zoom modes - because I've done a few with satisfactory results.
Perhaps one of the main reasons for this is that the average zoom/resize capabilities of CRT TVs are, in my experience... limited in their output quality.
HOWEVER, since I don't own a "modern" i.e. LCD/plasma TV, I have no idea if this would apply to them (and since I've read about different modern TVs having different upscaling results, for the sake of this topic let's consider that modern TV a decent brand one - Panasonic, etc).
What I need to know, therefore, is what looks better on average on a LCD/plasma TV: a 4:3 letterboxed DVD zoomed/upscaled by the TV itself, or a software-upconverted 16:9 (anamorphic) DVD ?