I don't see why scaling is a problem as long as the resolution of the Wii U signal and the TV are multiples of the console native resolution, for instance it works well on the NES which is 256*240 so can be nicely scaled to 720p, whose vertical resolution is 720 so exactly 3 times 240. Each (original) pixel is just transformed to a 3x3 TV pixel square.
This is what I'd expect, but the evidence I'm seeing on my system suggests otherwise. It seems to be scaling 240 to 480 for the gamepad (2x) and then scaling that to 720p (1.5x). That logically suggests that 2*1.5=3, but I'm getting "big pixel little pixel" syndrome. If you set the aspect ratio to custom and integer scaling to on you can see that the gamepad's resolution is being targeted: on a NES game if height is set to 480 it fills my 720p TV. If I set the height to 720 then it gets massively cropped.
Can anyone enlighten me?