At least you don't have an LCD that doesn't support 240p...
Let me put it this way, one of my friends TV's literally threw up a 'Mode not supported message' when I fed it some of that 240p goodness from a Wii connected via Component (We used an emulator).
The exact same setup worked relatively well on a Plasma TV.
But yeah, I'd say use something with cleaner video output or get it modded for some (If NES2's can even do that, do they only output raw Composite too?).

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