Dennis, the significant flaw in your discussion is the "increasing its resolution" statement. The resolution can't be increased beyond its native content(e.g. 480), but in order to be shown on 720 or 1080 displays the 480 input has to be scaled to 720 or 1080 by mathematically calculating extra pixels and interpolating them between the "real" ones. The display device has to do this if it hasn't been done previously by a player or receiver. As was said before, unless the player or receiver does a visibly better job of it, using the processing there brings no advantage in picture quality.
