NTSC and PAL refer to two things:
1. Video Timing (and this not strictly)
2. Color Encoding
Using RGB for the output option negates the latter (in fact, so does using "conventional" YPbPr component). The color encoding specifies how you encode the color information onto the subcarrier and is only relevant for composite and s-video.
The video timing is always an issue. NTSC specifies 525 line (~480 visible) interlaced, 60Hz (well, 59.94 now) video. PAL specifies 625 line interlaced, 50Hz (exactly) video. The reason for this is the difference in power line frequency. There are some advantages in terms of what happens with visual artifacts if things are close to each other like that. Apparently, early sets also used the AC line as a source of timing. There are some countries which mix things up. I believe Brazil uses 60Hz, 525 line video but with PAL color encoding, effectively giving the lower flicker video Americans are used to with the color stability Europeans are used to.
If you're in NTSC land and you get RGB output from your console, you'll have effectively "standard resolution" arcade video: 15kHz horizontal, 60Hz vertical, 480/525 line interlace. I do this from a PS2 all the time. If you're in PAL land and you use RGB, you'll get something similar, but 625 line, 50Hz (the line count difference brings you back to 15kHz horizontal), which many arcade monitors will accept as well.