Danfun128, yes the 1993 LD masters are 480i telecine's with the exception of ROTJ which is a 576i telecine (from memory I can't remember if the NTSC version of ROTJ was converted from the PAL tape or if there was a separate 480i telecine used for it). Back in 1993 it was more-economical to scan the film for each video format than to convert between the two. It's also what produced the horrible aliasing (happens when each filed isn't precisely aligned).

There are several ways to upscale video. To answer your other question, in order to do a clean upscale you need to fully degrain the source. You can put the grain back in when you're done, or generate film grain that is a close approximation to what was in the original source. As the source is DVD, there's no accurate way for the grain to be represented without being severely affected by the MPEG2 compression - so only a small part of a DVD image can ever hold the grain, and you can see this effect often in DVDs where grain seems to appear in static areas of the image and disappear over the more complicated and moving areas. Degraining is a delicate process - you want to remove as much as possible while removing as little fine detail as possible. It doesn't matter if you lose a little bit of fine detail, it's all about the balance.