Correct me if I'm wrong here, but I thought that BC was supposed to upscale all ur games to 720p or 1080i and use antialiasing. So why does my GTA san andreas look like shit? Clearly there is no antialiasing being done, whatsoever, let alone being upscaled, does this need to be configured somewhere? Or was all of that just hype that never came to be in the final product?

No backwards compatability does not make games look any better, it just allows you to play them on the 360.

quote from q&a with todd holmdahl, corporate vp of xbox product group:

"One of the great things about gaming on Xbox 360 is the satisfaction of knowing that every game will be playable in high definition. We are now proud to reveal that this extends to the original Xbox games as well. Every original Xbox game will be upscaled to 720p and 1080i, and will take advantage of Xbox 360’s anti-aliasing capabilities, delivering a picture that is clearer and crisper than anything available on Xbox.
"
so, just another case of some dumbass corp executive that doesnt know thier ass from a hole in the ground?

heres a link to the q&a if interested:
http://www.xbox.com/en-US/games/backwardcompatibilityqa.htm

It probably is upscaled to HD. It is probably just the fact that the graphics are out of date and it might be hard to notice a difference in GTA.