As I said, the best upscaling algorithm with XBMC is Lanczos without anti-ringing filter, or if you select DXVA in "Video scaling method", it uses the graphics driver's algorithm:
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. So an external player+madVR with Jinc algorithm is a better choice. CPU is less important, a decent dual-core processor is enough (Celeron / Pentium IVB or AMD A6-5400K Trinity, for example), unless you do
- transcode multiple videos for multiple devices simultaneously
- encode video as quickly as possible
- decode 4K in future,
for which Core i5/i7 IVB is recommended. Graphics card is far more important for madVR because it uses shader units via DirectX 9 to run its complex algorithms. If you are interested only in movies (24/25fps), AMD A8/A10 Trinity (integrated GPU), Radeon HD 6570 or GeForce 630 is enough for Jinc. For videos (50/60fps), Radeon HD 7770 (or overclocked HD 7750) or GeForce GTX 650 Ti is minimum.
As for full HD (1920x1080) contents, you can go with any graphics (madVR's Jinc chroma upscaling and RGB converson is still the best, but it's a bit harder to notice the difference in real-world examples). Note that Intel graphics has a few problems such as a dropped frame every 4 min when playing back a movie @23Hz, no full-range RGB output. NVIDIA requires a custom refresh rate (otherwise it is worse than Intel) or use smooth motion FRC of madVR. AMD works right out of the box.