Well with CGI animation, you wouldn't need to work back from a compressed video file to increase the resolution. The person who created it could/should have the original animation data files that the video was created from. That way they could then re-render at a higher resolution. Though I suppose it might need higher res textures incorporated sometimes or maybe higher polygon count models.
You could probably use something like an "auto-trace" function to convert it to editable (in 2D), but it would be much better to use the original animation data files (where you could have all the original 3d info).
With filmed content (including digital capture), the capture of the array of pixels is the highest amount of true info you can get. You can upscale it which is basically guessing. You could convert it to fractals - maybe that would be a good option. You could use super-resolution (I think that's the right term) and have it use info from multiple frames to make one frame - eg. a frame of a car in the distance could take picture info from the car when it was closer (or even at some point, re-create the scene in 3D space from multi-view cameras).
Another way is where I think some TVs have certain stored ways of upscaling certain content (eg. I think a set of common images and their upscaled versions), though I think you'd probably be better off with super-resolution.
Though mpeg type compression does create a set of vector info for the macroblock (or similarly named thing), it wouldn't give you enough for what you want.
I just looked and there does seem to be a vector codec in the works, but it didn't give much info apart from being "equal in quality to bmp" but whether that really gives better quality on upscaling I don't know. It would still only be encoding the amount of info in the given array of pixels it was given. It may be that creating the a video in vector form to the same quality as current mpeg type encoders could take up more bitrate, so it may be that quality-wise you may be better encoding it with codecs like H264 or H265 (HEVC).
So to cut a long story short, is there any way that DVD's etc.. will be able to be automatically reworked in software?
You could re-encode a video (that you owned the copyright for) in software and it may
give better quality than some hardware based video - you could have it take a long time to do the upscaling (and include whatever algorithm you had, including super resolution) - the output would be compressed though (and if not it wouldn't be easily playable). Or you could have a software based player do it - but it would need to do the upscaling in real time and may not be the best you could do.
Possibility of software ever properly increasing resolution & keeping quality?
I think the answer is that you can't have it upscale normal DVD video and have true info for all of what would have been created had it been created at a higher res (other than by chance or because the lens or filters limited it to that res in the first place). Though when they remaster (eg. from a higher resolution) and put that on BD or UHD BD you'll have a higher res version than was on DVD.