It isn't really games only, rather everything but DVDs and HD DVDs. And they added 1080p support a long time ago, simultaneously for both component and VGA.
And Rhino, the back of the boxes list resolutions, but they don't really mean anything. It's just a carry over from last generation were games had to be designed specificly to support various output resolutions, but the 360 can output any game at any avalable resolution. As for rendering resolution, the vast majorty of 360 games render at 720p, a few at 1080p, and some others at various other resolutions. None render interlaced ever, rather the 360 just interlaces for output as needed.