As shown in those screenshots:
When Hardware mode stretches graphics, it essentially just completely chops out lines to make room. When stretching to a larger size, it basically just duplicates random lines, which looks just as awkward. On smaller text, this can often make things completely unreadable.
Software mode, on the other hand, has a very smooth (slightly blurry) resizing effect, which almost looks better than the graphics without stretching in some cases in my opinion. In Software mode, even small text always remains easily readable.
Is there any way Software mode's effect could be used in Hardware mode instead of the current method?