I can still watch it, the blueray player upgrades the image
No, actually, this "upscaling" is not what you think it is. If they didn't do that, you would see a little postage stamp sized image surrounded by two feet of black on all sides. Upscaling simply means allowing the image of a standard DVD (or channel) to fill the screen. It does not make it better quality or anything like that.
It's up to Paramount to sell their product in a way that makes most money, it's not up to Paramount to sell Blu-ray players.
Exactly. Sure, they may lose a bit of business by selling TNG-R only on Blu-Ray, but those who can and will buy the new releases will more than make up for those who can't or won't do so.
And I apologize if this sounds harsh, but there's really very little excuse not to own a Blu-Ray player. If you can afford to buy DVDs at all, you can afford a BR player. You can get one such player for the price of two or three DVD movies! And since a BR player does not require a HDTV set to use (maybe to get the full HD effect it does, but not to simply watch), then I'm just not seeing the downside here.