Your TV is a 1280x720p (16x9) resolution. If you are sending your TV a 1024x768 resolution, the JVC is going to dispaly a 4:3 resolution and scale the image even further to reduce overscan since it believes you are displaying something from a PC.
So you're losing image due to aspect ratio, plus the TV is zooming in on the image to get rid of overscan. My suggestion would be to not use the VGA output of the Xbox360 and stick with component. Your TV will upscale the 480i image from the DVD to the native resolution of 720p. The JVC has a fairly good scaler. I don't think the Xbox360 would do a better job upscaling.