No, o.k. - everything is fine with your upscaled video. The quality doesn’t get worse compared to the orginal small video - but it also doesn’t get any better just by upscaling 
You are right with YT only showing the max. resolution provided by the uploader but i think you can still scale it up on your screen. So there’s nothing wrong with what you did - but there’s also not really any advantage - you just create a bigger file. Not sure about the audio quality compared to video size but i really would wonder if this correlates somehow. Why should they compress audio quality down just because of small video size? Audio doesn’t contribute much to the file size - so it really doesn’t matter.
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