Quick’n’dirt comparison; both upscaled (one at 720p, the other at 1080p), copied in MSPaint, saved as JPG (to simulate a sort of compression), opened with IrfanView, copied again in MSPaint and saved again in JPG:

http://screenshotcomparison.com/comparison/197757

I chose an animated feature, with few colors, because it’s easy to spot the grain structure; using a real compressed material, difference, in particular in details could be even more evident, when zoomed in; at normal (or higher) distance from the display, difference could be not that easy to spot.

Conclusion? To upscale to 720p instead 1080p to save bandwidth or disk space, and time to compress, and to upload, and to download etc. is a wise decision; result will be not that far from 1080p. But it will be, nevertheless…

Again, it all depends from many factors; but if it’s true that 720p upscaled = 1080p, then why we have 4K (actually 2160p) displays? It’s so easy to upscale 1080p to 2160p (2x) or even 720p (3x)…