XBOX 360 VGA and Gaming Lag

I have an XBOX 360 hooked up to a Samsung 930BW LCD monitor using a VGA cable. The LCD monitor has native(max) resolution of 1400x900 - 2ms response time.

What I would like to know is if I set the monitor to 1280x720 (720p) on XBOX 360 Screen Setup will the downscaling from the native resolution cause video lag vs hooking up my XBOX360 to Flat Screen Tube TV.

My friend claims that aiming for the head in an FPS game like Halo 3 will be improved. I did try the flat screen tube tv. I see a little difference but nothing significant.

However, I want to be sure after hearing from the experts.

The problem that v-sync causes is page tearing.

I don't have v-sync issues like page tearing. The picture appears to show up fine. What I am curious about is losing a frame or half a frame in the possible downscaling an LCD monitor does from its native 1400x900 resolution to 1280x720 resolution.