Thank you for the investigation Andy.
My Dvd copy identifies as 6 channel 448kps, so I am not sure which version that would be or if it is the same as yours. I would agree it does not sound great with either up mixer.
However I could say that of a number of films. I watched a copy His Girl Friday from 1940. It is a mono track and when I engaged one of the up mixer modes it sound like it was in a weird bathroom and had to turn it off.
I cannot do as yourself and turn off the base layer easily, however I did also try the section without the heights on Straight mode.
First, I will say it's a 35 year old film and the Dvd release is a decade or two later. How good the print was, and what the audio condition was like, I do not know. I think I saw it first in the cinema, but that was a long time ago. With all speakers engaged I could hear to a degree, the music and sound differences you identified. When I listened in Straight mode and the mix is front heavy LCR and seems to work a bit better and cleaner. I do still get the downdraft and occasional helicopter overhead, when she is searching for the tape in the dustbin. Also the front to back for the helicopter flying under the bridge in the spillway.
Overall I would agree, don't bother with an up mix.
I didn't have full speaker setup, when I watched the whole film earlier in the year. I might however suggest that isolating the heights is possibly not the way to test this type of film. Part of the flanging/distorting you are hearing could be intentional, due to an intended interaction between the other speakers.
So separated out is not a true reflection of the overall complete sound field. Just my opinion, but I watched the Aristocats, stereo, 1970, from an OTA recording and thought that up mixed reasonably well, particularly for the song set pieces.
It could be because music up mixing can work well this stands a better chance than a Pro Logic mix. Pro logic tracks already involve a fair bit of trickery to get the rears in the first place with delays and phase changes and possibly the DSU/Neural X does not like that much. I do think most of the 5.1/7.1 mixes generally work quite well.