Sorry for not getting back to you sooner.
Could you tell us more about the kind of signal your PSX was outputting in each case? 240p/480i/something else?
If the PSX outputs an interlaced signal which is then fed to the Koryuu, the output of the Koryuu should be interlaced as well (it does not attempt to deinterlace), and most TVs will apply deinterlacing to the signal.
If the PSX output is 240p, the Koryuu should likewise output 240p. Some non-CRT TVs do not handle 240p well, but that is a bit less unlikely in this particular case.
As in both cases you end up passing the picture to the TV through the component connectors, there should, in theory, be no categorical difference between the [PSX -> YPbPr -> TV] and [PSX -> CVBS -> Koryuu -> YPbPr -> TV] chains in terms of how the TV interprets the signal. The picture quality of a direct component connection will be much better, of course.
Would it be possible for you to provide us a video clip of the shimmering? Also, if you have an OSSC, could you provide the information shown on the OSSC LCD?