At the time I wrote that I was really into the Leitech DPS275 which was originally mainly designed to be a time base corrector and drop out compensator but now that it's dropped %90 in price it's a great thing for fans of SD video (especially LD) to clean shit up. It almost completely eliminates noise and it allows you to adjust the video quite a bit.
I'm not sure how much lag it introduces. I'm going to say somewhere around a frame and a half or so. I mainly used it for video. Mine actually croaked recently so...I think it may need a recap or something.
As for the Y/C vs component video, I'm with Arkham. On a game system there should be no obvious difference between them. Y/C's color information suffers but...on something as color-poor as a 16-bit game system...it really shouldn't matter. I'm currently running my CMVS in Y/C just because it's a much lighter cable to deal with and I can't see the difference on my pro monitor or my Toshiba TV. With the FX not even being RGB native in the first place it's safe to say that it's never going to look better than it does, excepting minor tweaks to the circuit, cap value changes and whatever.
On a DVD player, that's another matter.
IMO most people have biased opinions about video signal formats based on the performance of individual systems. I'm pretty sure the Genesis's rep for being "brown" is at least %25 due to its terrible composite out. Some systems have very good composite outs. Of the Classic era the SNES comes to mind (also looks rad in Y/C) and the PCE was decent. Half of the improvement you get by "going all RGB" you could see in composite if you improved the composite signal. I s-video modded my Genesis and when I did I never the signal was Night and Day better, even from the same chip for some reason...it stands to reason that an aftermarket NTSC encoder could make a MUCH better composite signal from the RGB out than the Genesis normal does internally.
These are observations based on early Genesis 1 machines with "the good sound".