Originally Posted by InfernoSoul
I personally think 1080P looks better over 720P on my LCD.
That's the issue right there. You aren't actually evaluating 1080p vs. 720p content. You are taking 720p content, pushing it through your internal scaler, and then displaying it across a 1080p screen. What you are in fact evaluating is your display and scaler's ability to produce a decent conversion.
Why might 1080p look a whole lot better? Because it is the native resolution of your display left untouched and you are bypassing the notoriously bad built-in scalers in consumer televisions.
Although I can't find the damn thread with the link there were several much more pure resolution tests done in the projector forum. For instance 2 higher end front projectors from the same manufacturer with similar optics and internals were set up and calibrated on site by an ISF tech. The only significant difference was 720p vs. 1080p in the builds. The images were setup and merged onto a single screen in the 120" range where one half was from each projector. Now keep in mind the 720p projector was being fed 1080 content and was forced to scale it putting it at a distinct disadvantage (although the internal scaler in the projector is far better than found in most consumer displays, still any scaling will not help matters in the situation). What did the dedicated hobbiests and videophiles/techs find? Even on a screen that large with high quality projectors it was very very hard for the human eye to discern any difference and it didn't get visibly apparent until they were within around 6' and the pixel matrix on the 720p was more clearly visible (i.e. same size screen but higher resolution = smaller pixels). This is a far better way to evaluate resolution than taking a 1080p display and feeding it native 1080 and 720 content pushed through a cheap scaler and making a judgement that what you see is all resolution.
Similar results have been found when such a test has been performed by other groups here at AVS. That's why resolution alone is not the deciding factor in a great display and lifelike picture. Yes it matters but once you get a decent amount (i.e. HD realm) you move into diminishing returns and other factors become far more important. These are the same factors that were important when everything was all 480 and people had to decide between displays all having the same resolution. Contrast, black level, etc... matters to creating a lifelike picture. In addition, scaling is not some trivial matter. This is the whole reason for the video processors forum.