I can't imagine that that thing upsampling NTSC to VGA (640x480, I guess) is going to be very high quality.

As far as shadowing/ghosting on the passthrough -- that's generally due to RF interference, usually crosstalk between the different signals on the VGA cable itself. It's possible that you might be able to improve this by getting higher quality VGA cables all around, or even by installing some ferrite beads (there's potentially some black magic and/or snake oil goign on there). It's also possible that the box itself is poorly shielded. In fact, that's the guess I'd go with. But I have no experience with it, so me calling it poor shouldn't carry much weight.