The receive performance of an RTL-SDR with an upconverter will probably not be as good as a "traditional receiver", for pretty much exactly the three reasons you highlight.
I can't speak authoritatively on sensitivity or noise, but I can think of two strikes against the RTL-SDR dongles in this regard:
- As a cheap USB dongle intended primarily for DVB-T reception, really clean input across the whole spectrum may not have been a design priority. Some companies, for example NooElec market (presumably) higher quality design/manufacturing around the RTL chipset and this may yield an improved experience.
- The other potential issue is that the RTL chipset uses an only 8-bit analog-to-digital converter (ADC) meaning even if interfering noise sources are solved there's plenty of potential signal lost, that would be above the theoretical minimum receiver noise floor but ends up being "rounded away".
Some further discussion this can be found at https://www.reddit.com/r/RTLSDR/comments/3niyxe/rtlsdr_noise_floor/ and https://groups.google.com/forum/#!topic/ultra-cheap-sdr/8vFptr61TAA.
You also got the other main issue with this setup right: filtering. The fun of these kinds of SDR setups is that you can tune "any" frequency. But the design are usually fairly simple, and if there's much filtering at all it tends to be very wide.
I'm no seasoned transceiver designer, but my impression is that a good receiver architecture, with the right combo of filters available at all the right stages, is something of an art form — and one of the investments you are paying for with a "traditional" receiver. This is not to say a highly frequency-agile SDR and good filtering are incompatible; rather it's not something to be expected in a $15 DVB-T dongle and a general-purpose upconverter.
That said, I have this exact combo and don't regret purchasing either. Definitely no regrets with the cheap little RTL-SDR which was an incredible value and opened the world of radio up to me. I'm also happy with the Ham it Up as far as delivering on its promises. However just for RTL-SDR usage, I really enjoy the "100KHz-1.7GHz Full Band RTL-SDR USB Tuner Receiver" I found later, since it combines the RTL and an upconverter both into a single little package!
But to get back to it: without external filters, all of my "generic SDR" device combinations end up vulnerable to various and sundry imaging/intermodulation/etc. problems. So if you end up trying it — and IMO theres's not a lot to lose in doing so. I think you'll find either device useful for all sorts of other projects even if this one fails… — plan on adding some filtering of your own before being able to see if the noise/sensitivity are also good enough.