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Re: video upscaling
From what I've read on this so far, it does depend on the upscaling chip. I know that the newer receivers are offering more options like you said, but it still seems that the higher end receivers have the higher end upscalers at a higher price. Onkyo's new line with HDMI 1.3 has video upconverting to HDMI and faroudja deinterlacing from 480i to 480p on their lines through up through 805, and their 875 and 905 models (releasing later this summer) have a Reon video processing chip (very good quality) that convert just about any signal/resolution to 1080i, 720p, or 1080p (of course these cost more money). I've heard the video upscaling in the 875 and 905 models is likely as good/better than most of the mid level displays out there.
The new Yamaha RX-V861 lists upscaling to 1080i/720p, but I haven't heard much feedback and/or reviews on this model. But if you're not thinking about "futureproofing" (HDMI 1.3 and the latest audio formats) and/or not really wanting 1080p, some current/older receivers with upscaling to 1080i/720p (like the Pioneer Elite 82 and 84 models) may meet your needs and the costs of these is likely to come down after all their new models come out.
I've heard various reports from folks on the upscaling qualities of displays, but it seems if "all" you want is a 720p you could probably get one with a high quality scaler at a bargain. Then you can save money on a receiver.
I'm personally wanting to upgrade from 1080i max res. to 1080p to take full advantage of Blu-Ray, so I'm sort of doing the same analysis (scaler in display vs. in the HTR). To answer one of your questions, if you get the specific product you can get feedback on that product. I know certain companies have good/bad reputations for upscaling, but mostly it does depend on the actual product AND what functions the component is utilizing - some choose to deactivate certain features. Let me know what you decide or what you find out. Good luck.
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