Nice to see you got it working!

Use Ctrl and + or - to change the scaling factor. So, set it at hq2x and scale it up to 3x = hq3x! That's how I'm doing it, anyway.

Yeah, I'm pretty sure there was something seriously wrong with my original install. On top of my INI editing problems, the hotkeys weren't behaving correctly. Now that I have reinstalled, it looks like everything works correctly, including the hotkeys.

What you may end up having to do is not edit the .ini file directly, but add stuff to the executable that gets put onto the desktop. I couldn't get the better MIDI sound to work by editing the beneath.ini file, but I got it to work by doing the following:
1. Right click on the BASS shortcut icon and click 'Properties.'
2. Scroll to the front of the 'Target' section, and right after the listing ...ScummVM\scummvm.exe", add -ewindows (no quotes) . This will change the sound to General MIDI music. This should work for the graphic filter as well; just add -ghq3x after the -ewindows item. Haven't tried it yet, but it should work.
I'd love to try running this on my XP comp, though; I have a real MT32 on that and I want to hear how it sounds.
EDIT: Yep, the filter works as well. So, if you have any problems getting the game to play good music or give it a shiny new visual coat and the .ini won't work for you, then try this.

nearest neighbor (3x) is the best
i aint afraid of no pixels