This definitely works. I've uploaded 720p drone footage (which already looked pretty crappy), and youtube avc1-encodes it with low bandwidth settings. The video looks like absolute garbage. If I upscale it to 2k (it has to be above HD for this to work), youtube will vp09-encode it and use a significantly higher bitrate, and the resulting video retains most of the original detail. I consider this a requirement for all of my uploads.