This may be feasible for WQHD, but upscaling from 960x540 > 1920x1080 doesn’t really sound like an upgrade from WXGA anymore.

Another problem is that while there are some 3D games that support internal upscaling (FSR etc), not every game has the option to scale the UI indepently so things look extremely small at higher resolutions. The games that support both should be an exception and look better on a higher DPI screen.

I do believe that you could either slightly increase the resolution and screensize to 1600x1000 or 1600x900, or just use a WQHD-screen so you can get clean 2x upscaling from 720p.

1280x800 is 16:10, a standard aspect ratio, and isn’t far from 16:9 at all. 720p (HD) is 1280x720

The steamdeck has a super awkward resolution that doesn’t fit into any standard aspect ratio. Which creates problems with some games.

Games don’t need to run on the native resolution.

Yeah they don’t. The Deck’s resolution is fine. Do you have any examples of games that don’t run well on the deck?

edit:

Playing a lower resolution on a screen that has a higher one will generally also make the image look nicer

No. Native resolution always looks better