I was writing the earlier this week (either here or VH). Pros NEVER over-process video. Amateurs make this mistake frequently, however. Don't do this.
Accept that the source is what it is. Restore it, yes. But don't try to do wacky things trying to make it either 1% better or perfect, such as boosting the SD res source to HD res. That's never going to look good. The very best you can hope for is a tiny improvement. But odds are it ends up worse, not better.
If you're going to do it, I would resize to 960x720 and then add 320 on each side, simply for the sake of a nice clean border.
This is correct.
But again, not suggested.