Putting sync on Luma (or green) does nothing to alter the quality of the video signal. It just saves a wire. Many high-end/professional CAD systems use(d) Sync-on-Green. They were running high-end coax cables for the video, so saving a cable or two by not having to run separate sync lines could mean real cost savings with no impact on video quality.
"VGA" is RGB with separate syncs; SCART usually uses RGB with sync on a composite video line (CVBS). VGA connections can also use composite sync (like arcade games do). In this case, sync is conventionally placed on the horizontal output and the vertical sync output is either tri-stated or left in a static state. Sometimes the vertical sync output just duplicates the composite sync that shows up on horizontal.
Now, North American component is in a different colorspace (YPbPr) than arcade games and euro SCART (both RGB), but that has minimal error in conversion: the conversion can actually be mathematically expressed losslessly, but it's usually done digitally so there is a little bit of round-off error and quantization error that is often not detectable even with instrumentation, let alone the human eye, since it's already down in the noise.
RGB and YPbPr component should look identical upon even close inspection if done properly. S-Video (Y/C) is close, but a side by side comparison will favor the RGB/YPbPr setup, and it will depend on the quality of the TV how good it turns out. Composite NTSC/PAL tends to look pretty bad on anything with sharp color edges (which pretty much describes video games).
Regarding the O/P's question, it's possible that your monitors may not support low resolutions over the "VGA" input. Many TVs with "VGA" (PC) inputs only go down to 480p (actual VGA timings) over that input, not 480i (CGA or "standard res"). I have no idea why not, given that all the component inputs on those same TVs will, but they don't. Give it a shot, though. It shouldn't hurt anything, and it'll look a heck of a lot better than composite video.