For example the Philips 32PF9731D which I believe you've tested. Is it just the case that the signal is scaled down to 720 or even 768? 1080i would seem a bit pointless then in this case and you'ld be better sticking with 720p wouldn't you?
Thanks for any light you can shed on this.
The 1080i signal is first deinterlaced into a progressive signal, and it is then scaled down by the TV to exactly 1366x768. A similar process happens with regular Sky+ which is 576i... the TV first deinterlaces it to 576p, and then upscales it to 1366x768 (which is unfortunately a lossy process, but certainly tolerable).
If you set your Sky box to 720p this would not be so useful. Whatever the matter, the Sky HD channels are broadcast as a 1080i stream. By setting the box to 720p, the box itself would deinterlace 1080i into progressive, it would then downscale to 720p, which the Philips TV would then upscale back to 1366x768. This is more destructive to the image than getting the Sky HD box to stick at 1080i output.
If there were 720p sources available in the UK, there would be some sense in keeping them at 720p. However Sky HD channels are 1080i, and HD-DVD/Blu-Ray are 1080p so 720p has kinda been forgotten.
As to the merit of 1080i in the first place. Firstly both True HD 1080p and HD Ready 768p/720p can accept the higher signal, with the benefit that if you did own a 1080p display you would retain full resolution. So if you only have a 768p TV then you aren't being given a signal *worse* than your native resolution, yet at the same time 1080p display owners are getting full res. But it's not like the 768p suddenly doesn't get an actors left ear or something on account of not having all the resolution!!!
Finally (promise) if we are talking a circa 42" screen I personally see very little benefit in 1080p. The pixels are so close together in such a small surface area that the extra resolution is lost by the time you've gone and sat in your sofa 9ft away!!