Well, your knowledge of this is far greater than mine so I will take your advice. I'd really like to keep it at 480p with a high bit rate and let the electronics do the scaling though. If I encounter more problems with compliancy though I will do it. What is the best way to upscale without losing any detail?
EDIT: I'm beginning a test encode at 480p now so I'll be able to compare directly between the mpeg and x264.