The difference is like swithing the flicker filter on and off. I think that "enable vertical filter" option is the one that disables the filtering. Very interesting watching RE with all that dithering and banding, a side result of using 16bit color depth buffers in most Gamecube games, i think. That explains why the game doesn´t support 480p as the developers were aware that the Gamecube´s anti-flicker filter will blur the picture in interlaced video mode, hiding all the dithering and banding from the GC´s 16 bit color buffer. RE Remake is one of those GC games that would actually look better on the Ps2 with 32 or 24bit color buffers and no need for dithering.
Have you tried the game cube games video mode on a Wii with an RGB cable ?
@AffrosCuriositiesOfficial