Generating a small fast frame + upscaling CAN be faster than generating a large slow frame without upscaling, so it is possible to get the same perceptual visual quality at a higher FPS.
Again, this is an intra-frame operation. Latency is introduced independently of frame generation rate by frames being queued or delayed in the pipeline. For example, the new DLSS 3 frame generation feature needs 2 complete frames to generate the one in between, so the first one is queued, and the remaining 2 are delayed.
Delays in processing inputs can also be a big factor in latency.
Since vsync happens outside of individual frame generation, having it on or off doesn't matter for our argument.
I found plenty of results in Google demonstrating that upscaling doesn't affect latency, or at least not enough to be perceived by a human.