Here is a funny thought... I understand that the content producers don't want any of the new HD stuff to get out via analog from fear of piracy.

But if they restrict an UPSCALER from outputting over component anything over 480p, this is like saying that up-scaled SD video rivals HD video and one might start selling pirated up-scaled SD video as HD video. This thought won't help their efforts to push HD DVD or Blu Ray through, let alone the format war. There are enough voices out there questioning how compelling moving to HD video on disk is, considering how good up-scaled SD may look and how worthless a lot of video content is.

On a different note now, gong was right, as expected, and recalibrating my system did the job. HDMI works just fine and after a proper recalibration my Oppo 980H is giving me very good picture over 1080p, the best I've seen from my DVD collection (a very limited one as I find pretty hard to find a movie really worth buying, renting them only once being enough).

As far as 980H vs. 981H goes, I heard various opinions, some saying that 981's image is a bit soft whereas 980 delivers a crisper one. 981 might fare better with very difficult content, but, by and large, the two are both very good performers and the difference in picture quality between them might be even hard to detect by untrained eyes, like mine.