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This question has been rattling around in my head for awhile now.
As we all know, internet video can look a bit "soft" at times. Does anyone know if a video processor like a DVDO unit would sharpen these images up? I was just curious whether that type of technology would help internet / streamed video.
Not really. You can't output at the native resolution of the web video so you would lose the scaling the DVDO would do and you are left with just sharpening algorithms on the output resolution.
A rule of scaling and image processing is that you can't really make a video better than it is in it's original form. You can remove things like noise, but you will sacrifice resolution in exchange for taking out noise. Sharpening is just making the edges stand out more. In doing so you will produce ringing in the image. Upscaling does not improve the quality of the image. It just interpolates extra data from the existing data. It has a tendency to make the image softer. Sharpening brings back some of that sharpness but at the expense of other artifacts. Sometimes it may look better to you, but it isn't really any better in mathematical terms. A DVD would look its best on a 480p display. Upscaling it to 1080p creates artifacts but since displays don't do native 480p (except for the rare EDTV sold a few years back) then we are stuck having to scale the image to fit our screen resolution.
Having a good scaler just makes it video suck less than a bad scaler. You are never really improving the image. Just not making it too much worse.