At multiple levels :
1. It was the worst of the three displays we tried it on. We had a new 46" LCD from NEC (industrial units) with 720p/760p resolution. 1080i looked bad on this, really bad but I blame that on the scalar in the display. 720p was decent because it filtered out some of the artifacts. The Qualia 005 LCD though, was ruthless in 1080i mode. Fifth Element simply was not watchable. We had people scream about how bad it was as soon as they walked in. Mind you, this is a 46" LCD so it is easy to stand right next to it and criticize the picture. But on the same set, HD DVD does superbly and outdistanced the Penny HD plasma for the most part.
2. Compared to any other HD source. I wrote a review of the Sony LCD with HD cable, D-VHS, etc. a while back in the flat panel forum. I have never seen such bad HD video come out of LCD until I played the BD movies on it. Yes, I am biased. But this goes well beyond that. The images just don't look natural beyond being full of artifacts. We did a side by side of Fifth element superbit and the images just look more normal in superbit. Yes, there are moments of high-res imagery in BD discs but they quickly vanish and one is facing pretty bad looking stuff on this display. I suspect the Sony MPEG-2 encoder is doing temporal filtering, causing the image quality to vary and become artificial at times.
So net, net, I recommend if you are a BD fan, use a 720p. That filters out some of the artifacts and makes the picture somewhat more pleasing. Don't plug it into a 1080 LCD or you will be disappointed. The Rruby is a bit of an exception in that at 10 feet, the image was pleasing. But closer examination showed all the problems above, but not as clearly.