"Cheapness" is not necessarily related to cost, unfortunately.
All I can say is that on my friend's 36" Sony WEGA, S-Video through an RGB to S-Video converter was almost indistinguishable from an actual arcade monitor. That's a pretty good indication of how good it can be.
Were you using a PC for your testing TOK? Some PC cards will do native/unscaled output via component, but use a bunch of scalers and crap when running composite and S-Video, which could explain your experience. Heck, some are like the cheap TVs mentioned and don't actually support S-video out, but rather just dump composite onto an S-Video connector (oops). You may also have had the S-Video output set to composite mode, which would certainly cause your reds to look bad, though black levels should be fine.