I am using the same equipment combo as you and YES, I have the same problem. It has been driving me nuts!!!
No consistency. Seems like I get totally random resolutions, regardless of the resolution I set in the set-up menu. I have had it sync up at resolutions not offered by either piece of equipment
Sometimes I will get a screen that is totally saturated with blue in say 720p, but then I try to restart and I cant get any resolution to work.
Let's not even get into the whole thing about the configurations resetting to default whenever I turn the player off OR even just press stop (yes I flashed the firmware to 1.1.10 to no avail).
Like yourself, I selected the D2 because of what it is advertised as being able to do. I am in the process of returning the D2 for a replacement. I will say they are trying to be as helpful as possible, but if the replacement unit behaves like the one I returned, I will be returning it for a refund (unless the D3 is released by then; I might give that a shot).
Sorry all I could offer was sympathy. Good Luck!!!