I can't see pixels on my 65" Mitsu. from ~13' away where I sit (or even standing much closer) and that even when only watching DVD's that are projected at 480P.

1080i from say,... PBS, look much sharper though, but it depends so strongly on the original picture source's res. AND quality.

I doubt you'll have any problem between 720p and 1080i as far as total resolution or downconverting, but since 1080i seems to be more popular I don't dig 720P as much, and once 1080P sets become possible, everyone who's into it like we all are will be upconverting all that 1080i to progressive for a much better than 720P picture.

'Real world speaking' none of this matter right now though IMO.

One thing to note on DLP.
The current DLP RP sets (from Mitsu, Panasonic and/or Pioneer -I forget which) seemed to have a blurry effect on fast motion.
If you look at one in a store that feeds the same HD signals to all their HD sets and you see something fast like a Football game...

Look at how blurry/choppy (hard to describe) the pic looks as it pans across. It's like it can't keep up w/ the picture's speed.

Now look at the CRT-based sets. They'll follow the motion much better.
I haven't gotten a chance to look for this effect on the FP DLP systems I've seen, but it should be the same since it's the same DLP chip.

Not sure if the newer DLP chips move any faster?

Could be 'cuz the original feed is 1080i and the 720P DLP sets are too slow at downconverting? Just a wild thought based on total guessing.