You can install Wii U games to the internal memory, but not SD card. For an external drive it will be formatted to only hold Wii U games and nothing else. A program can be used to turn regular Wii ISOs and WADs into a Wii U image (including forcing various settings, like Gamepad play) in order to put them on the same HDD as your Wii U games. That also let's you launch them directly from the WiiU menu without having to enter vWii mode and use a Wii remote.
AFAIK there's no way to upscale Wii games beyond what the vanilla built-in Wii mode will do. There may be a way to force 4:3/16:9 mode to a Wii ISO but other than that I don't remember any resolution settings.