You should be expecting this. This is normal. When using an LCD there's always a degree of blurriness when running in any non native resolution. That degree varies depending on the monitor, it's native res, and how distant from it is the res that you're using.
For instance, some 1280x1024 monitors are better than others when running at 1024x768 so the ?level? of blurriness that occurs differs from one monitor to another. That's regardless of the card you are using.
I'm using a 1920x1200 24? LCD and the best non native res for old games is 800x600, at least for me. I can stretch the 800x600 res to display at 1600x1200 (with black stripes on both sides of the screen). That means that I will still have blurriness due to the stretching but the image is stretched across both ways equally (horizontal and vertical ? (800x2)x(600x2) = 1600x1200) so at least the aspect ratio remains the shame and the shapes are not distorted.
If I got it right you're saying that this blurriness is more noticeable when using nVidia cards right?
I can't comment on that but it is not very easy to compare blurriness so are you sure about this? AA may have an impact on the overall blurriness but since the res is stretched to fit the monitor, blurriness will occur. Besides, stretching is more or less the exact oposite of AA. Under these circumstances I do not believe that AA really makes much difference, if any, and if it does I do not believe that there're many that can tell.