What are you upscaling with? Most video scaling methods I see in normal editors default to blinear/bicubic or Lanczos methods where for game footage you probably want a nearest neighbour method (sometimes called point resize) to a whole number multiple* of the base resolution. If you do such a method for normal video it looks horrible but pixel art scaled to whole numbers is a different matter entirely. Even the sub par 3d of the DS tends to benefit from such treatment (though this can vary as the light blurring/softening can less aliasing some).
*there is a reason many channels will do something like a later post in
https://gbatemp.net/threads/be-a-great-video-maker-and-replicate-this-video-effect.360509/ or the thing where they have the footage in a border with a washed out thing in the background, and being able to leave it as a multiple of things is that.
Also you need not capture uncompressed AVI. There are lossless algorithms out there, even some very light ones, that that will do far more than that. I don't know what standards desmume supports these days but if it is still mainly VFW codecs (most of the rest of the world has since moved onto directshow and other means) I always liked
https://www.videohelp.com/software/HuffYUV . Should also be part of FFDshow if you want a few more options
https://sourceforge.net/projects/ffdshow-tryout/ . Smaller encode sizes means less splitting.
As for split AVIs then if it is that much of a problem for your editor then you need a better one, or more likely to find whatever method it has inbuilt for appending/joining videos -- most video editors you are likely to find in either the free world or stumping up money for have the option here for that. If you are simply uploading a video then that is one thing but if you are doing even the tiniest bit of editing to cut boring sections out, dub over things, subtitle/annotate something, instant replay... then getting the videos in a line should be a tiny fraction of that.
I should also note that there are DS emulators out there which render 3d stuff at a higher internal resolution and thus can look amazingly better.
https://gbatemp.net/threads/hi-resolution-ds-emulation.364549/
I don't know if the people you are comparing yourself to are using such a thing but it is a possibility.