red_one wrote:and then upscaled back to 1080p for playback?
Yes. In the end it's scaled to the video window size - e.g. to 1080p if you're outputting 1080p.
So the chain for 1080p is:
non-Ultra: video file -> decoded video -> downscaling to 720p -> processing -> scaling to window.
Ultra: video file -> decoded video -> processing -> scaling to window.
Basically that means that if you have same videos with different resoultions (720p and 1080p), than with non-Ultra Motion² 1080p video would not look better than 720p one. That is the price for lowering CPU load (2 times less pixels to process -> less load). With Ultra turned on CPU load should be 1.5-2 times higher. So that's strange that in your case it remains the same...
Cpu load depends on content (e.g. static scene requires much less computation) and it can vary a lot. I'm having about 70-80% maximum CPU load when playing 1080p with Ultra turned on on i5-2410m (2 cores + HT, up to 2.9Ghz BUT Sandy Bridge, not Ivy Bridge). I think your CPU (that is slower by 30%, judging by the benchmarks) is not fast enough. Can you re-check if CPU load is near 100% at moments when video is shuttering?