The only hardware scaler in the PS3 is the horizontal scaler in the RSX. All other scaling implementations that scale in both x and y use the SPU's and you can program as good a scaler as you want to, if they don't already exist in the PS3 SDK, provided that you have the SPU budget for it. A general statement that PS3 scaling is crap might only be applied to RSX horizontal scaling, not for the general case.
Does any ps3 game exist that does a high quality upscale on spu? It's a genuine question because I don't know of any. Upscaling dvd's to blu-ray res takes a hefty amount of processing time and they are just doing 720x480 to 1920x1080. I imagine that a good quality upscale of 1280x720 to 1920x1080 isn't cheap. You can do a software 1280x720 to 1280x1080, and then a hardware 1280x1080 to 1920x1080, but two independant upscale steps isn't ideal when image quality is concerned.