Dolphin doesn't upscale. It actually renders the game in 720p or 1080p.
Wiipower is correct. I must say though, the quality of internal upscalers has gone up quite a bit in the last year, for sure they have if you have a good LCD, and not the bottom of the line Costco special. I'll explain a bit for those that don't understand upscaling vs native rendering.
Let's say you have a 1080P native set (like I do). You feed it a 480P signal, or any signal less than 1080P for that matter, and the internal upscaler of the TV upscales it to 1080P, because that is the only resolution the TV is capable of displaying in.
So what about all the upscaling DVD players out there? There must be some reason for that. Well yes there is. Like Wiipower said, the internal upscaler on quite a lot of TVs is shit. So you have a DVD player with an upscaler that does a better job of it, and then feeds your TV a native signal. Generally though, and certainly if you have a good TV with a good built in upscaler, any kind of external upscaling is at best worthless, and sometimes even makes the picture look worse.
Anyway, any kind of magic box, or homwbrew, or addon that promises to upscale the Wii and make it look better is bullshit. The only way to ever see a Wii game look better than the 480P it puts out right now is Dolphin, or if/when Nintendo ever releases a backwards compatible HD Wii 2 or whatever.