I also run an ATI w/ TV-Out. Have no real issues with it.
However, I hear a good scan converter, custom resolutions, and a hacked version of MAME is superior to anything else out there.
Check out Tetsu's TVMAME page at http://www.trouble-makers.com/kami/emulation/main.html.
Ok did you happen to look at the price tag on that converter? It's $1,795.00!!!! You could buy a 25 inch arcade monitor and a high end matrox card to run it for that. (Some matrox cards support arcade compatible interlace modes.)
That's not a "normal" scan converter, it's a mid grade one somewhere between a broadcast quality and the ones that you can pick up for a few hundered and look like total sh*t. I have seen this particular one in action, and let me tell you it's nothing special... it's slightly, and i do mean very very slighty better than standard svid output. However, if you use that extra money to get a really good tv (like a sony) and a really good, brand name ati, then you'll get the same picture.
I did some "field testing" back at the university a while back is how I know.