Yes, Craig, for the best possible image quality, you want a DVD player and
a display device both equipped with a DVI-D port. I believe that many latest big-screen TVs and plasmas, as well as most front projectors, are DVI-savvy. Same for the latest satellite/OTA HDTV tuners.
On the player side, however, only a few (including a Samsung unit and the Bravo D1, made by the obscure V, Inc.) are available at this time. One political/regulatory obstacle that's been hindering the production of DVI-savvy players is the sticky issue of digital copyrights.
In part for the same reasons, very few, if any, AV receivers are equipped with a DVI-video selector at this time. The new flagship ES receiver from Sony (costing ~$5K) is the ONLY one that I am aware is capable of DVI switching. The current state of the market really sucks in these regards...
The new LCoS TVs are by no means unique in the 1080p capability. Quite a few front projectors including my own, as well as some latest RPTVs and plasmas, are capable of handing the 1080i and
1080p signals (although there is no use, unless you set up an HTPC).
I am not very familiar with HD-DVD (yet), and wish somebody else to fill in here. But I believe that the proposed HD-DVD media format is capable of 720p, 1080i and 1080p.