I've been doing a lot of research on running the Wii U with component cables and I was amazed to discover how many people believe that component cables can't achieve 1080p. Because of HDCP protection, I know that 1080P over component is only allowed if the TV allows it, otherwise you end up with a no signal or blank screen. The Wii U doesn't have any copy protection on video signals since it doesn't have the ability to play blu-ray or DVD movies, so Nintendo has allowed 1080P usage and it even upscales Wii and Wii-U games to 1080P over component.
At the moment, my current TV setup has me limited on HDMI inputs. Eventually I'll have to get an HDMI splitter, but in the mean time I figured instead of switching out the plugs whenever I want to play the Wii U, I'll just keep it hooked up using the official Wii component cables that I already had with my old Wii.
I've also seen debates over whether component actually looks better on the Wii U, due to the limited RGB over HDMI. Anyway, I plugged in my component cable and set the Wii U to 1080P and the results were not what I expected. The picture wasn't very sharp and had some noticeable static distortion around letters. The best way to describe it is signal interference, what looks like little white squiggles or dots that move around onscreen text and some other objects. From a good distance away from the TV you can't even see it, but it's quite weird because if I set the Wii to output 1080i, then the picture looks beautiful, crisp and colorful. 720P looks fine as well, but not as nice as 1080i. The problem only occurs in 1080P and only with the component cable. In 1080P over HDMI the picture is perfect, of course.
1080i is my best option right now until I get a splitter I suppose, but I noticed that my TV must not be very good at handling 1080i because when I play Virtual Console games, I can sometimes see scanlines briefly appear over some sprites, similarly to how the Wii would do that in 480i. 1080P HDMI has no scanlines present.
So what could be the cause of this? I've heard stories of people using Wii component cables to achieve 1080P with much success, unless their TV can't support it, then it doesn't show up at all. My only theory is that my TV isn't supposed to display 1080P over component cables, but because of the Wii's lack of HDCP perhaps the TV accidentally allows it...?