Currently, a 60hz screen isn't perfect and pixel overdrive will be used to reduce motion blur. In effect, there are more 'unique intermediate frames' being displayed as the system tries to approximate the discrete input frames physically. The actual blur on fast-moving content on a modern screen is huge...
Ignoring latency for a moment, if a controller has the previous and next frame plus motion vectors and knowledge of the precise pixel response and decay curves for the monitor... it should be possible to continuously adjust the current/voltages(?) to every pixel to better approximate what a much higher refresh rate low motion blur panel would look like on high fps content. Can't remove blur but can make motion continuous rather than a stair step. A kind of smart motion interpolation + overdrive implementation.
The assumption is the higher fps the more linear the motion is frame to frame. 30 to 60fps interpolation should have more noticeable abnormalities than 120 to 1000hz.
I doubt one could make it work for computer graphics (since motion vectors aren't easily accessible), but when displaying video the results could be good, although users seem to dislike content with interpolated generated frames, and perhaps your proposed tech could get a similar response.
My hunch is motion interpolation is preferred at high fps. E.g. a high action scene at 30 fps will need a lot more information to be filled in and has likely already been mastered with the target frame rate in mind (camera shutter speed etc).
But 120hz or more content will have very little motion between frames, and this motion will be far more linear (e.g. a finger might move 1cm between frames, but doesn't bend so less motion artefacts).
So 120hz content upscaled to 960hz+ would be much closer to native 960hz content and preferable to displaying at the original 120hz. A logical implementation would be VR headsets with a built-in DSP.