How to properly label material if it's real photos but upscaled using AI

I often upscale photos with Topaz Photo AI that I have cropped down really small. Topaz does a good job and the acceptance rate remains high. 

If your camera sensor is so small that the images don't meet the minimum size requirement in Adobe Stock, they're unlikely to be accepted, and as @Nancy OShea   said, upscaling isn't all that useful on small images. If it's a real photo, it can still be uploaded as a photograph, unless you have used editing tools to add some element that wasn't there in the original image. Then it does have to be declared as AI.

Upscaling low resolution images can backfire spectacularly.  It's not typically recommended.

https://helpx.adobe.com/stock/contributor/help/editing-dos-and-dont.html

But since you already did it, you'll have to wait & see what the reviewers decide.

"However, I recently read in a chat that if a photo is real but upscaled, it should be marked as AI. Is this true?"

Not at all true.