Okay, I THINK I finally understand this. I am ready to pull the trigger on a PS3 but need to ensure that I can avoid running software (not worried about BRD at this point) in 480p.
My direct-view CRT set is the Sony KV32-HV600, a 4:3 set with 1080i display capability. It has component input and DVI-HDCP.
I have verified that this set accepts an incoming 720p signal and converts it to 1080i. I accomplished this by setting the output of my OTA HD tuner to 720p and then entering the service mode for my TV. The service mode display listed 720p as the input and 1080i as the current TV display mode.
Therefore, could I simply set the PS3 to 720p output for games and then let my TV convert it to 1080i? Would I then avoid being forced to run any games in 480p? Or, am I missing something about this entire 1080i issue?
On a side note, I owned a X360 for four months (won it in a contest) and it was a fun system although it did not blow me away. Who knows, I may buy another in the future. It definitely looked great on my CRT in 1080i though.
PS3 sold me due to its "openess" as I am a bit of a tinkerer.
Also, a 42" 1080p Westinghouse or similar set is definitely in my future, although I have no complaints about my CRT aside from its smallish screen size.