Latent diffusion models for medical image super-resolution universally inherit variational autoencoders designed for natural photographs. We show that this default choice, not the diffusion architecture, is the dominant constraint on reconstruction quality. In a controlled experiment holding all other pipeline components fixed, replacing the generic Stable Diffusion VAE with MedVAE, a domain-specific autoencoder pretrained on more than 1.6 million medical images, yields +2.91 to +3.29 dB PSNR improvement across knee MRI, brain MRI, and chest X-ray (n = 1,820; Cohen's d = 1.37 to 1.86, all p < 10^{-20}, Wilcoxon signed-rank). Wavelet decomposition localises the advantage to the finest spatial frequency bands encoding anatomically relevant fine structure. Ablations across inference schedules, prediction targets, and generative architectures confirm the gap is stable within plus or minus 0.15 dB, while hallucination rates remain comparable between methods (Cohen's h < 0.02 across all datasets), establishing that reconstruction fidelity and generative hallucination are governed by independent pipeline components. These results provide a practical screening criterion: autoencoder reconstruction quality, measurable without diffusion training, predicts downstream SR performance (R^2 = 0.67), suggesting that domain-specific VAE selection should precede diffusion architecture search. Code and trained model weights are publicly available at https://github.com/sebasmos/latent-sr.