From what I've tested anyway it seems to be less about the formats and more about the quality of the signal the console outputs and the quality of the converter box. The NES, for example, outputs a really clear composite signal if you hook it up to a tv that properly up-scales 240p. The genesis/megadrive, on the other hand, is blurry as hell. The snes outputs a really clear svideo signal, so clear I doubt rgb would improve much. The n64 outputs a really dark svid signal to the point of which you almost need a amp of some sort.
It's the same deal with the converter boxes... some of good quality composite up-scalers almost look better than some of the cheaper component ones.
About the aspect ratio thing I don't think it has anything to do with the hdmi format itself, it's just how the up-scalers are designed... some people equate hd with a 16:9 ratio I guess.
You are right about the rgb thing though, it's just that consoles are weird. If you are going to hook a bunch up you need to either have a solution to each video format or mod them all (if possible) to support one format. Nintendo likes s-video but hates rgb, Sega likes rgb but hates svideo.... you don't get the option because the other format isn't supported.
Answering your last question, sure you can convert hdmi to vga but you would be taking an analog format (rgb) converting it to a digital format (hdmi) and then back to an analog format (vga). That would have to introduce some lag. Dvi and hdmi are similar, but vga is analog and due to how easy it is to manipulate analog video all scan line generators that don't cost a fortune need vga.
Shoot I'm not hung up on scanlines or the best possible format or all of that stuff in the first place. The genesis, again as a good example, might look blurry but the developers took advantage of that. So yeah rgb up-scaled would be the sharpest picture, but you can then see all the dithering the devs used to fake transparency. It seems to be a console by console thing.