well the psp resolution is 480x272... fusa only stretches it out to the entire screen which is why it might look poor, especially on larger TVs. So the resolution is the same, but it just makes the pixels larger on your screen. Without filters, it won't look great.
I saw mention that filters were in the making though I'm not 100% positive on that. If they are, then it would help give a less jagged look while in fullscreen.