I have some music videos that i have reason to believe (pretty sure) that they are KDVD or KSVCD ... thing is they are interlaced would it make the quality of them shittier if i reencoded them again as KDVD & DEINTERLACED THEM?

If you want to play it in a SAP, quality is good and you have not any other reason to reencode (system change, etc.), keep it interlaced.

what about if i want to play it on 1 of those new digital lcd tvs?
will interlace show lines on that?

I have not experience with that, I'll wait our partners answer that question.

There is no regular progressive tv broadcast currently. TV sets are desgined to display interlaced stuffes and very few can handle progressive streams.
So don't worry...

And even if there ever comes a non-interlaced TV, I'm sure it'll include a built-in deinterlacer because there's a lot of interlaced stuff around. The progressive content that is currently broadcast consists of two almost (if not completely) identical fields.

I think many special display modes (such as natural motion etc.) included in today's TVs are actually deinterlacers.