I would trust your display to do a much better quality job of scaling 480p to 1080p than a $20 dongle. Simple internal scaling should not cause much lag. Does 480p over HDMI also lag as bad at 480p over component? For example, if you set your Xbox 360 to 480p instead of 1080p over HDMI, is it measurably slower when doing a Rock Band 2 auto-calibration?
At a minimum this thing will likely add 16ms of additional lag to capture a frame for HDMI transcoding. You could probably expect another 16ms for scaling and transmission. A simple 480p Wii2HDMI dongle is more likely to be in the 16ms range, but really none of these things are designed with lag in mind. They much more of a convenience item.
Order one from a retailer with a great return policy and find out.