OMG, no. That's simply atrocious. It makes your beautiful N64 games look like PS1 ones!
My guess in this debate always has been that those ugly sharp pixels must be an aquired taste of those on the side of the console war of the time who had to rationalize their preference for the look of games on their less capable platform of choice. ;)
I'm a fan of the result achieved with just the HDMI cable in that video - the first pass of processing that's removed by the gameshark hides the dithering, so removing this seems to make things look worse in a lot of cases (and as you point out makes it feel less like an n64 and more like a PS1 - just add some polygon jitter and you'd be all the way there). But the second layer of processing that the HDMI cable removes just adds more blur for no reason.
Edit: actually watched the whole video and realized the HDMI cable is actually doing post hoc image processing to reverse the blur, which is why the dithering is still wiped out but the blur is gone, which is pretty neat.
