Blu-ray shouldn't need much video processing - it's those SD sources that need to be "worked over" to be displayed on an HD display that push the need for good video processing. The BDP-83 should offer a great solution for standard DVD (as the 983H already does today), but it can't help with all of that SD television material you may still be watching or those other SD sources (Wii, VHS, LD, and so forth). Considering how dreadful the scaling and deinterlacing are in every HD cable box I've used (particularly deinterlacing), I find the idea of a good video processor to take proper care of those sources appealing - as long as I can skip that extra processing when my good sources (983H DVD and Blu-ray would be basically it, although I do still have an HD-DVD player sitting around here looking rather forlorn as well), it could be great.
Any display will probably do a little processing, although it's not guaranteed. The signal must reach the display's native resolution (which varies from display to display, although a lot of "720p" flat panels are 768p). If it arrives in some other resolution, the TV must make adjustments. Deinterlacing is particularly tough, so delivering a progressive image to a display can make a big difference. Some display also offer a "per pixel" mode that allows a 720p or 1080p (depending on the native resolution) to be displayed without processing, even if it means sacrificing a few lines of pixels.