The ABT chip is pretty good. Ideally you'd not have to process the Blu-ray video at all, and be able to output the DVD as 480i. That would let the ABT do the de-interlacing (where it should excel). If you can't get 480i over HDMI, most implantations of that chip include a feature where it will re-interlace 480p and then do the de-interlacing properly.
Ultimately you should pick which ever way looks best on your display.
Pioneer VSX-1018AH-K, PDP-5020FD, DV-79AVi
Axiom M22s, VP150, QS8s
Sony PS3, surround backs