Consuetudo, I wish to be clear. The downscaling issue actually does not exist in any documentation regarding HDCP. It exists only in the Firewire/5C/DTCP documents, in the DirecTV set-top box rules, and, perhaps, in some form in the proposed broadcast flag rules (although I doubt the third of these is true).
HDCP is the only one of these that doesn't speak about the analog inputs and doing anything to them. That's a semantic point, but a true one.
Now, John asks a good question and quite candidly I have no idea right now.
But one bucking for the Panasonic might want to know because the old models did a wondrous job taking 1080i --> 480p but -- in truth -- were less good with 720p --> 480p (or at least seemed to be).
The good news is that while I always credited Panasonic for the excellent downconverts, recent data has indicated to me that up- and downconversion is not so expensive to get right. For reasons that defy logic, the upconverter in the Samsung 931 DVD players is better than the one in the Toshiba LCOS RPTV even though one costs 1/20th off the other.
Now, obviously, that's one anecdote (aka the singular of data), but it's a powerful one. As set-top boxes get more advanced, perhaps their downconversion will be every bit as good as Panasonic's. If this is true, then sending 720p out of an STB as 480p should do no damage.
We will need a local Bay Area buyer if someone wishes me to help test this out. We can feed the set some 1080i via the Zenith I have and then feed it the same broadcast over 480p to see how well it downconverts. That won't truly tell us how well it downconverts 720p, but, then I find that test somewhat impossible to achieve.
I suppose we could try the latter test -- and a 1080i test -- on an older Panasonic, however. It would speak to whether the Zenith's downconversion is better than, worse than, or equivalent to the Pansonic's.
There is no difference in HDMI cables. If you can see the picture without visible dropouts or sparklies, the cable is working at 100%. No other cable will display a better version of that picture. You're simply wrong if you think there is a better digital cable than one that is already working.