On the contrary, as you yourself admit ("While the extra resolution in a 1080p screen won't make a difference under 50" screen size") that particular form of "blanket" statement is simple math.
Your point that there tends to be correlation between 1080p sets and better electronics works both ways, as mkoesel has hinted at. The question of 1080p remains irrelevant, and the question you are highlighting is which set uses the best image processing. That is a totally separate question and it does not do anyone any good to conflate the issues.
The issue is not that you should specifically hunt out a 720p set at the relevant viewing distances; rather, it's that you should not use that particular specification as an element of comparison, either to favor or disfavor a particular model. If a good quality television in your budget supports 1080p, that's great, but that fact isn't itself worthy of "points" toward the end decision (unless you are considering a future change in room configuration that might bring you inside the 1080 window, in which case, you have to incorporate that possibility into your end decision).
While the extra resolution in a 1080p screen won't make a difference under 50" screen size, it doesn't mean that you won't notice a difference between a 46" 720p screen and a 46" 1080p screen at 11 feet away.
If the only difference between two models is the 720 vs. 1080, then on the contrary, that's exactly what that means. You're talking about a difference other than the resolution of the panel making a difference in image quality: onboard electronics.
I would bet that most entry level 720p screens use cheaper scalers, etc.
Now we get into the improper blanket statements. It is sometimes the case that cheaper components all around are combined with cheaper 720p panels to make the budget displays.
However, it is equally common to see (and in the majority of cases with upper-tier brands) that the reason that the television has been placed in the budget line is because of the lower cost of the panel, with the television using otherwise identical processing hardware to models higher in the lineup.
This is doubly true with plasma televisions, which rely on highly expensive PDPs, for which the price difference between the total number of cells is greater than for LCD production methods. Bargain brands are the ones to watch out for, since they cannot further reduce the PDP costs and thus must cut corners in the electronics in order to undercut Pioneer, Samsung, etc.
In both cases, it's not the resolution that makes a difference. It's the quality of the electronics. And that is really what you are paying for.
Precisely why using resolution as a stand-in for overall quality is an error.
This is becoming increasingly true, with the caveat that most 720 models surviving as of 2009 are simply 1080 models with swapped-out panels, sharing electronics from some portion of the 1080 model line. In terms of electronics, there is usually the "mainline" equipment and the "premium" equipment, with all 720 and most 1080 sets using mainline hardware, and selected model lines using premium parts. There's not a special super-gutted set of electronics on top of that for the ultra-low end in most cases.
It isn't economically efficient to further degrade component quality, because it adds complexity to the logistics, engineering, and manufacturing, all of which eats directly into profit.
More often, the fewer features are in the form of missing components or actively disabled functionality (e.g. the USB ports on lower-end models lacking the necessary firmware to implement photo/music/video playback, though the hardware is present). It's cheaper to do it this way. Combined with the standard practice of having more "fuzzy" tolerances on the lower-end products such that they allow a higher rate of defects through at every stage, this is what makes most low-end products cheaper and thus geared to the low end.