Scaling is changing the resolution of the input to match the display, not the framerate, which I agree should always output natively so it doesn't look like a flicker book.
Well i do not mind that 1080i blu rays are changed to 1080p for viewing..
Everything you send to a digital display will be scaled, either in the player or in the display itself.
All panels/DLPs/LCDs/DiLAs etc. will also be progressive, so they may deinterlace as well.
Most displays deinterlace and scale average at best, hence why people like to use a decent off board scaler, use one and stick your display in native mode (ie overscan off, 1:1 pixel map or whatever your manufacturer calls it) and bypass the displays processing and you can get truly stunning results.
Decent SD can look HD and well processed HD can look incredible.
This is the reason everyon raves about the Oppo, its scaling and deinterlacing are fantastic, as good as �3000 video processors for �500.
Just make sure your display is in native res mode so all its poor processing is bypassed.