The output quality can never exceed the source quality.

You can't get it from the files you have already converted as they are already compatible. You'd have to re-rip at higher rate with HB and then let iTunes down convert it to the selected format. Either way, HB won't go that big. If you took a 640x480 and had it upconvert to 1280x720 it would not look any better than the 640x480 version and would likely look worse since something is always lost in the conversion process.