Of course it will. Have you even tried to hook up DOSBox and Daggerfall to a TV yourself?
The "body font" Daggerfall uses for journals, scrolls, and books isn't the most legible however. Try running the game using an HQ2(3)x or 2(3)xsai scaler - the characters get fairly distorted when interpolated. I for one prefer to simply use the normal2(3)x scalers as it's more authentic, but even then, it would be wise to use a "thicker" font if the game were to be played on a television screen. Look at what the Xbox version of Morrowind did, for instance. It's not really the size that's the problem, it's the serifs and curvatures of the characters.