Upscaled. But I know what you mean. One should be able to disable scaling filter. It's possible on some monitors, via the menu.
But really, even if 640x512 *WASN'T* the perfect resolution for 1280x1024, the result should be better. On G2420, it's probably "filling the screen vertically" (something x 1080, not 1024?) causing it. Possibly, in 640x540 overscan, if you can test. Probably not.
But for a 1920 rez screen, this really looks like they downscale it to a random resolution below 500x500, scale "whatever" resolution to that, put a blur over it to cover up their mistake, and stretch the blurred low-res pixels to "whatever".
Tell me how it is possible in 2009.
I need huge blurred screenfuls of artifacts zoomed up in my face like I need an injection of battery acid.