A lot of this will depend on your display. The display will have to scale the image to it's native resolution, no matter what. If you send a 480i signal to a 1080p display, the display will have to do the scaling and de-interlacing in order to show the image at it's native 1080p resolution. The real question must be whether a receiver will do a better job at either upconverting function than the processor in your display.
Simply put, you are feeding a 480i signal either to the receiver or the display. Neither can "invent" new information to fill in the additional pixel information required for a 1080p display. By doing the conversion in the receiver, you are only switching which component will do the job that the TV would do in any case. Whether it is better to do this in a receiver versus the TV will entirely depend of the quality of the processors involved. The best way to tell if you will see an improvement is to actually try the equipment in your own home.
It's not exactly a cut and dry issue, with many arguing that upconverting receivers are a waste and others arguing that upconversion is an important feature. As for myself, I have a processor with a really good video chip that I have set in passthrough mode. I get a really good picture that I kind of think is because, at the very least, the processor is not degrading the signal in any way. In many cases, this is the best you can hope for.
