What's happening with the player you purchased is that it is starting with the standard resolution DVD and outputting HD format. However, it is still limited by the original input resolution. As a result, a DVD upscaled to HD resolutions will never look quite as good as a true Blu-ray or HD DVD disc that starts with true HD content. The results may look better than a standard DVD player, however (depending on how well the player "simulates" the resolution), and the quality can be very satisfactory.
Honestly, I do think that Target and RCA ARE selling fraudulent products when they imply that upscaling will be just as good as Blu-ray or HD DVD. But it's a very fine line that they don't quite cross over. Nonetheless, the player IS outputting HD resolutions from DVD, just not full HD image quality. Plus, you don't get the improved sound formats that Blu-ray (and the late, lamented HD DVD) also offer.
But, if you like the look of the new player and it adds to your enjoyment of your new plasma TV without breaking the bank, just enjoy it and wait until Blu-ray players drop in price. (Although I have two HD DVD players; many, many discs; and still prefer it to Blu-ray, I can't recommend buying into HD DVD a full year after the "war" has ended.)
Know that when you get a true, HD resolution Blu-ray player with Blu-ray discs, your plasma will look better still and it will feel like you purchased a new TV all over again.