A big discussion when talking about Shenmue and current technology is how to properly display the image. Some connect via VGA to a monitor which is the easiest solution and looks great. Most want to play on their TV's however, which as time goes on gets a little more tricky. I've done various methods including VGA on monitor, VGA to component on a CRT 4:3 HDTV, VGA pixel for pixel on an XBR-3, VGA to HDMI through a HD third party scaler (the one Adam used) and finally now this method which I can confirm absolutely demolishes every other way I've ever viewed this game.
So the first thing to know is you'll need to properly upscale the image, otherwise it'll look horrible. To properly upscale into HD (while retaining the correct aspect ratio) a third party scaler is required, which are niche and quite expensive. They get the job done, though obviously don't push the envelope any. The image quality is better than displaying pixel for pixel.
4K UHD is the same principal, though thanks to new technology becomes a bit easier (just more expensive, but is an investment). The two best scalers on the market as of today are the X-Reality PRO by Sony and the Revelation by SHARP. I won't go into major detail, but both are comparable and take different steps to achieving the same end goal.
Because the X-Reality PRO is an internal scaler, we're actually going to want to convert the VGA signal to HDMI raw without upscaling. From there the X-Reality PRO will do the rest and by the rest, I mean this. Do take a glance as it'll show the amount of tech the engine uses to upscale an image, something a third party scaler simply isn't capable of.
The end result is this and I don't think much more could be expected of a game developed from the late 90's onward, especially with a rendering resolution of 640x480. The X900B in general hides jaggies particularly well, but what stands out to me the most is the color range and depth. Granted this is a testament as to how far technology has come, but it also says a lot about the production value of Shenmue. It truly was ahead of it's time.
Here is the game (both Passport and Disc 1) running:
The equipment (though the most important tech such as the scaler is internal):
