The perfect picture you speak of on a emulator isn't presenting the game as it was originally meant to be viewed. Most any emulator these days is run trough the hardware filters on your computers graphics card that wasn't possible on the original hardware. This has been commonplace since Power VR 2 days.
The actual system hardwares video output was designed around composite and rf analog signal,thats what they intended you to use. By doing the RGB mod you can intercept RGB off of the hardware and obtain a perfect picture in its purest form,however this is not how Hudson and NEC intended you to play as back then RGB was rare in homes,and you have to improve the RGB signals. Esp here in the USA analog RGB didn't gain a good foothold at all. Mostly it was used on computers like the C64/128 and medical equipment and arcade cabs. In Japan it had a slightly more common use but still small and limited to the elite home theater/gaming wise.
S-video has been up until now what people considered the best visual output on home tvs in NTSC regions overall,until component surpassed it,but not effectively on SDTV. S-video was designed around 480i NTSC or 576i PAL,whereas Component was designed and intended for much higher res with progressive scan ability. Because of this,and some other factors coming into play,sometimes you can have a SDTV with both Component and S-video input and both have the same quality on screen. On some the Component video will be better,but not by much,and typically on these types of tvs where component is better,its because the S-video quality of this tv isn't so hot.
This happens alot on SDTV sets as the manufactures tend to do stupid things like:
If the TV offers Component,S-video,composite,and RF they sometimes crap out and use the worst components possible for the lower grade inputs so that composite will end up looking horrible,S-video will end up looking only slightly better then composite and Component will be absolute king. These kinda SDTVs tend to be the ones with 2-line comb filters,half the time,or 3-line filters that use poor quality chips that cause composite to be so horrible.
Without a good comb filter composite suffers from alot of dot crawl,color bleed,picture noise,ect ect...
Some people don't know this so I am going to list it,The comb filter in your tv is used for composite and Rf,not your S-video and Component video. If you get into laserdisc collecting you'll also find out sometimes your Tvs comb filter can be weaker then your laserdisc players,granted you have a LD player with s-video out and a comb filter,and your TV is dirt old,like early to mid 90ies. All ld players with s-video have comb filters on board to clean the image before it gets sent to the Tv. The only time this isn't the case is if you have a hacked/mod s-video port on a LD player like the laseractive as some people mod those. On good modern tvs with great comb filters better then the one on your LD player you can actually get a better picture using your LD players composite output then using your LD players S-video.
A well built SDTV will have S-video with quality on par with the Component and both will be from a visual standpoint outstanding looking. These days its going to be harder to find tvs like this SDTV wise. My 24 inch Apex monitor only has S-video and composite,but its quality is superior to my friends Sony Wega 36 inch S-video and composite quality,and is on par with his Component picture quality when compared to my Apexs S-video. I hear people complain about this problem alot with Sony and Philips/Magnovox SDTVs of varring screen sizes also saying the S-video is poorer then what it should be and composite is more RF like then anything else.
