Re: WHY does it look worse?

Are you sure you're responding to what the commenter has in mind?

The ipad 3 screen is the same physical size, but 2:1 resolution. Hence pixels are the same ratio smaller. Upscaling the image exactly 2:1 brings the upscaled pixels to the same real-world size as previous screen's pixels.

I think that's what people mean. Getting the ipad 3 to display something exactly like the ipad 2 should be easy.