Same reason SD looks awful on HDTV's. While some scaling is better than others, scaling generally looks awful.
It's not really the same. With SD, you're scaling from 720×240 images that need deinterlaced (either to 240p or 480p) and then scaled up to 1920×1080.
With the iPad, you're scaling from 1024×768 to 2048×1536, which is an even 4× and trivial in comparison.
The problem is not the scaling, it's the
type of scaling that Apple chose to use. Essentially, it results in non-retina apps being filtered. I took a photo of the Korg iMS-20 app running on my iPad 2 at 1024×768, then sent over a screenshot of that to my iPad 3 and took a photo of it. Finally, I took the 1024×768 screenshot and scaled it to 2048×1536 using Nearest Neighbor resampling in Photoshop, and took a photo of that on the iPad 3.
Be sure to click these images to open them in a new browser tab and display them at 100% ("magnified") size for comparison.
iPad 2 photo:
iPad 3 photo:
Nearest Neighbor scaled image displayed on iPad 3:
Note how the Nearest Neighbor scaled image looks virtually identical to the iPad 2 one, except the grid over the image is all but eliminated due to the higher pixel density.
This is what I mean when I say that the iPad 3
could look almost the same as the iPad 2 when running non-retina apps, though the additional clarity due to the higher pixel density could make the lower resolution of these apps more apparent than it is on the iPad 2 itself. (the grid can help mask the low resolution)
Instead, Apple chooses to filter apps by default, which can work well with images; notice how edges on the dials smoother, and there's no blockiness on the red light, but looks awful with fine details/text; see how soft/fuzzy everything else looks.
Most of the apps I use on a regular basis have now been updated with retina support, but I'm sure that at least
some of them used to render with Nearest Neighbor scaling rather than being filtered. I'm not sure what the reason for this is, but personally I feel that Nearest Neighbor scaling should have been the default, and filtering your app should have been optional. iPhone apps running on the iPad generally seem to render this way, so there's no reason they couldn't do that with iPad ones, or make it a system-level preference. I suppose that's too technical an option for Apple to give people…