I've spent hours searching for DVD player info, trying to learn about upconvert, blueray, hd, ect, but I still have no clue what is gonna work best for my sony 970.

Regular DVD players are out of the question seeing as how I just tried a movie using a ps2, looked great on a standard TV, but not my 970. Will upconvert give me near HD? Is it blueray or hd for the 970? What models?

Both of the hi def formats, such as blu-ray and HD DVD, will upconvert regular dvds. A Toshiba HD A2 might be your best bet. Does a good job of upconverting regular dvds and plays HD DVD hi def movies.
I have both blu-ray and HD DVD hooked to my 34HS420(basic version of the XBR970), and the movies look great. Upconverted dvds also look great. On newer dvds, it's almost hard to tell they aren't hi def.

PlayStation 3 is your best gift for your home entertainment. It has everything for low price.

Any model HD-DVD or Blu-Ray will connect to your XBR970. I know...I've connected my Toshiba HD-A2 HD-DVD player to my XBR970 via HDMI cable. And it upconverts my standard def DVDs as well. The same will be true for Blu-Ray. The only real difference is the Sony won't display 1080p, but it'll look amazing nonetheless. Upconversion players will be fine too.

Frankly, I'm surprised your standard DVD picture doesn't look good on your XBR. It should. You may want to adjust your settings. Invest in one of those calibration DVD's (like the DVE or AVIA).

Do any HD players let you display 1080i over component?

Sure, you can achieve 1080i through component cables from your HD-DVD player. Some people connect it that way.

I use the oppo 970 upconverting player via HDMI. I get handshake issues ALL the time on this set, mostly when trying to calibrate in service menu with it on. I usually have to turn the player on first then the TV, and if i go into service menu it takes a a few on and offs until the input shows the dvd menu.