Do "Upscaling" dvd players really play back in HD quality?

It is compressed 1080.
Or, up-converted to compressed 1080.
Yep, HD is a marketing word. Not what it originally was intended to mean.

I get people that argue with me (comcast) that there is a difference between Digital and HD.

No, it is processing used to improve the lower resolution video input. If you have a 1080p tv and play a regular old 480i DVD an a regular old DVD player, the video signal needs to be adjusted to fit your screen. This processing is called upscaling, and not all are created equal. Oppo is apparently one of the best upscalers at a reasonable price, so that makes it the best value. If you get a blu-ray player, then no upscaling is needed when you play blu-ray discs on it b/c they are 1080p DVDs. However, if you use the blu-ray player to play old 480i DVDs, how good the upscaler in that blu-ray player becomes a factor.

HD resolution is either 720 or 1080 horizontal lines that make up your image. DVD resolution (and VHS, for that matter) is made up of 480 lines. Those lines either have to be multiplied by a factor of 1.5 or 2.25 to scale up to your HD TV. Those additional lines are the result of your upscaler’s algorithms. Since they’re not part of the original recording, they’ll never be as sharp and detailed.