Some sort of frame TBC is required, it's not optional, not something you can "see if you need it later". Line TBC cleans the image, frame TBC cleans the signal. You need both. Without some form of frame sync TBC, yoiu will drop frames, you will lose audio sync. VHS is a chaotic violent video format, and these are the non-optional tools needed to capture it without flaws and problems. Trying to capture without it will just lead to wasted time, and reduced quality on those captures (as frame TBC is just
mostly signal correction, it does have some visual corrections).
Composite is often seen as a blurry soft connection type by many, but that is actually mostly determined by the devices compositing the signal. The composite Cypress has excellent internal comb filtering, so the output is better than whatever was input. However, the output is re-composited, and it is still a step down from s-video quality -- just not as bad as some would think. This unit isn't without quirks and caveats, which is why the price is much less than other TBCs. It has proc amp, so it can somewhat offset color accuracy.
"effective image resolution", as you understand it, is correct.
The biggest issues with composite is dot crawl. There are some filter methods to hide it (Avisynth, not NLEs like Premiere), somewhat, but not remove it. The degree of dot crawl varies, and again comes down to the devices as the root cause. This specific composite-only Cypress will be more minimal than normal, but never 100% gone, a limitation of composite.
If you can swing the funds for the TBC-1000, you won't regret it, just go for it.
You may, however, regret shortcuts (ie, the quality hits incurred) from budget gear later on. Budget gear is generally suggested for those that simply cannot ever afford a quality TBC, and yet still want good results. It's better than no TBCs, using low-end VCRs. This will be their one best attempt at the project. Also sometimes for the truly cheap or stubborn. It's far easier to buy/use/resell the s-video TBC, than try to recapture everything later because you're not happy with the budget gear results.
TBC has always been the costliest item in the workflow. At best, on par with VCR costs, if the VCR was a bit steep. Capture cards have always been inexpensive by comparison. So it only "feels weird" because you're not used to it.
Realize that I've never liked the costs of TBCs either, and balked at it myself back in the 90s. I was stubborn at first, seeking cheaper options, but quickly adopted both VCRs with line TBC and external frame TBCs after realizing it resolved most of my issues and complaints. I don't like to spend money, and that's why I buy store-brand food at the grocery store, use coupons, wait for sales. But TBC is a required item, so we do what must be done. DIY video is a hobby, and all hobbies have costs. Video is probably the cheapest hobby I have, compared to photography, action figures, and some others -- even after having bought multiple TBCs and VCRs and capture cards!