John, your question may have become lost in the conflict, so I'll have a go. You didn't fully describe your TV, in particular the key point of whether its "native resolution" is 720 or 1080 pixels(picture elements). Both your player and your TV have a "deinterlacer" to convert an interlaced picture to the generally smoother progressive scan picture. Likewise both player and TV have a scaler which processes the incoming signal so that its number of pixels matches the native resolution of the display. Regardless of whether the incoming signal is interlaced or progressive or its number of pixels, it has to end up matching the display so that a full picture can be shown; a 720p display has to have 720 pixels with progressive scanning, a 1080i display has to be interlaced with 1080 pixels. Either the player or the TV can be used for its deinterlacer(if needed)and either can be used to scale the picture up(or down). So, for example, if your TV is 720p you need to deinterlace the DVD material to progressive and scale the 480 pixels of the DVD up to 720(which doesn't change the 480 resolution)to fill the 720 pixels in the screen. You definitely don't want to send a 720p set 1080i material, because then the TV would have to deinterlace it and partially scale it back down(i.e. compress it)to 720.
The question is whether to use the player or the TV to scale or deinterlace. Since this is still a developing technology either one might do a better job of processing, or they might be essentially identical. So, experiment to see if using the player's processing looks better than letting the TV handle it.
