I think it highly depends on the platform. I tried out my Sega Saturn on an LCD and I have to say that for such an early system, it actually looks splendid on an LCD TV. It's hardly a rule-of-thumb though - you're entirely correct in saying that anything below HD does looks better on a non-HD television since it doesn't have to be artificially scaled.In all honesty, go to a charity shop or try and at least grab an old style CRT TV. Retro games never really look good on an HDTV especially if it's blown up to 32" and above.
I think it highly depends on the platform. I tried out my Sega Saturn on an LCD and I have to say that for such an early system, it actually looks splendid on an LCD TV. This might be because the games I've tried were pretty high-resolution though and it's hardly a rule-of-thumb - you're entirely correct in saying that anything below HD simply looks better on a non-HD television.
The discrepancy between a 16" and a 32" is obviously caused by the physical size of pixels. If you blow up 640x480 up to 1920x1080, each "pixel" will be represented by aprox. a square of 3x3 pixels on the HD TV - if those pixels are physically big, it's not going to look pretty, and don't even get me started on 320x240 or below. Of course there's filtering and resizing algorithms in play to account for the size discrepancies, but that can introduce unwanted blurring. At the end of the day, a game looks "as intended" when played on a TV type it was made for - HD games look horrible on CRT's, retro games are hit and miss on HD TV's.I have found out that playing my N64 on a Sony 32" HDTV ends up looks like crap but when I got a 19" HDTV from a supermarket, it actually looks nicer. The game I remember the most that looks HORRIBLE was Final Fantasy Tactics on a Sony 46" HDTV where I can't read any of the text at all.
In the end, it was when I visited a relative and they gave me their old Sharp LC 20SH1E TV that got a decent retro TV. To the OP, I would say that you should also be on the lookout for EDTVs. They're TVs that were made during a time before HDTV really took off where the maximum resolution it can output is 480p but at least it looks nicer than the old chunky CRTs if you don't like that sorta style of TV.
I have found out that playing my N64 on a Sony 32" HDTV ends up looks like crap but when I got a 19" HDTV from a supermarket, it actually looks nicer.
To the OP, I would say that you should also be on the lookout for EDTVs. They're TVs that were made during a time before HDTV really took off where the maximum resolution it can output is 480p but at least it looks nicer than the old chunky CRTs if you don't like that sorta style of TV.
It's not as inconvenient as it seems - in my flat, there's an LCD TV in the living room for general use and a CRT TV in my room exclusively for gaming purposes. Now, I'm not one to be picky about displays and I game on both anyways, but if I do want a CRT fix or if a game downright requires it, it's there to be used.Either way, it's going to suck to have to have TWO TVs. One for retro gaming and one for modern gaming and watching TV.