The only reason I can imagine that this would be the case is for Progressive Scan, which is only available with Component?
As far as I know there is little difference and a DVD picture is converted a number of times between the two formats before displaying the image on screen. Dr John may be able to help explain this one more technically!
RGB should be virtually identical to component but the reality isn't always the same. Component can get squirted down excellent BNC connectors where as RGB is mashed in the horrible Scart connector and then you have things like tvs treating these signals differently.....
Re difference bewtween R1 and R2, a whole ne ball game and not necessarily a PAL vs NTSC one either....
You can change between RGB and YUV (component) via a simple equation. Doing this in hardware is a little bit more tricky.
In the real world, component is slightly softer - ever so slightly. The is because it was decided to limit the frequency of UV colour difference signals. In my RGB to YUV design, they are at full frequency.
But generally speaking you won't notice the difference once you've sat down to watch the program.
As for SCART vs BNC. SCART is a fantastic connector, we've got everything in one connector - audio and sound. Seperate BNCs are good because you noramlly have a good quality cable between each connector, however, that's not to say that you can't have good quality cable in a SCART lead.
You've got to look at your system in a top down approach. At the top, you've got to have the right signal. Best is either RGB to Component (YUV), next S-Video and then composite well above RF links. You need the signal that's most appropriate for your viewing device, and to determine what your source can offer. Video conversion may be necessary and at this stage should not be avoided - it's where the biggest gains are to be had.
On the next level is the cables you use between equipment. There's no point in using £500 video lead if it's carrying composite video. The picture quality was never there to begin with, so go back and look at the above level. Similarly, if you've got RGB or Component video, don't use a cheap and nasty cable! The biggest improvements to be had are in the above section. Better to spend £150 on a converter, than £150 on a cable.
Finally, there's the connector. Yes, they are important, but if you don't have the above to points covered, there's very little point. A good clean connector is what's important. Then you may look at gold, and other material, platting.
In short, get the right signal first. Then look at the cables, and finally their connectors. All are important, but each must be taken in turn.