Yes, depending on what the post-processing effects are. Things like colour grading aren't going to make any visual difference if applied at 720p or 540p and upscaled, but there will be a processing cost, whereas actually drawing pixels in post (eg. grain), rendering in 720p will add fidelity. Without any idea what post effects are being applied, typical use suggests post effects will be being applied on a 540p backbuffer. Regards the dev quote...
The HUD is probably the only thing not being upscaled. The cost of upscaling (probably on GPU rather than CPU) is needed to maintain fidelity in the UI. If they didn't care about a blurry UI, which really does look rough, then they could have composited a 540p UI and had Xenos upscale through the principle video pipeline as normal. If they want a 720p UI, there's no other choices beyond render a 720p backbuffer or upscale a lower-resolution backbuffer to 720p via software before overlaying UI.