Rejoice my friends, the Wii U does in fact upscale games to 720p and 1080p. As pointed out by NeoGAF user SPE, while the games are upscaled to HD, the native resolution of the Wii games are still the same. The result is a clear and sharper image for almost every Wii game available, but with really clear and pixelated edges.
This isn’t a bad thing though and it really helps out quite a few Wii games look better. I took it upon myself to test and see how good the games came out in comparison to actual HD games like Ratchet & Clank All 4 One (720p) and Assassin’s Creed III (1080p). The games I used in this experiment all looked pretty good. The games are obviously running at a 480p Native Resolution, but the upscaling to 1080p can often create a beautiful picture that makes everything pop out as opposed to the Wii.
Some games like Twilight Princess and Skyward Sword ended up looking a bit more pixelated than other games like Sonic Colors, Smash Bros. Brawl, and Xenoblade Chronicles, with the latter looking amazing with the upscaling, especially Brawl which looks like it could almost be 720p Native at times. You won’t get that clear and smooth picture quality a game running in 1080 native resolution can provide, but it will still look exceptionally better than your Wii, making the upgrade well worth it.