What Squire meant is that NTSC->PAL conversions often look worse than the NTSC original, and PAL DVD releases are frustratingly often conversions instead of both versions being created from a single source superior to both (in which case PAL is superior to NTSC due to the higher resolution). I don't know if this actually the case for TNG (i.e. whether the PAL DVDs were created as upconversions from the NTSC DVDs, or whether both the PAL and the NTSC versions were encoded from the same source), but Squire assumes that it is, and if so, speculates that for PAL audiences the new HD version will be an even bigger step up in quality than for NTSC audiences.
Of course in truth the HD version will be so much better than either NTSC or PAL as to make any difference between NTSC an PAL negligible.
The conversion looks worse I am sure, probably because of a cheap up-rezzing as you say, but all the STNG versions extant look "fuzzy". Regardless, we are all in for a revelation.