It's not true. Typically, the ONLY way to get upscaled playback is via HDMI. The MAFIAA's rules are that upscaled output must be encrypted and HDMI is the only high-resolution connection that is encrypted.
So if you have an HDMI TV set, you should do just fine with any HDMI-based upscaling player - like most of the HD-DVD players that are selling for firesale prices nowadays.