Join Date: Mar 2003
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I think both Blu-ray and HD-DVD will be 1080i (unfortunately), in which case you'd want a good deinterlacer & scaler to get 720p. An external scaler like the Lumagen HDP or HD Leeza should do the trick. Or, superior 1080i processing (1080i -> 1080p -> 720p) is built into the Sharp 12k and Marantz 12S4, eliminating the need for an external solution. Most anything else will be sub-standard (1080i -> 540p -> 720p).
Also, to answer your question, 1080i properly converted to 720p is just as good, if not better, than 1080i native (as evidenced now by 1080i DVHS, OTA, sat, and cable feeds). But, of course, not as good as 1080i properly deinterlaced and fed through 1080p display.