Component video is named YPrPb because it is not RGB.
The Y signal, also called luminance, is a mixture of
30% red, 59% green, 11% blue. Pr is R-Y -- the luminance signal subtracted from the Red signal. Pb is B-Y -- the luminance signal subtracted from the Blue signal.
Component video is used instead of RGB because the human eye does not resolve colors as well as it does intensity changes. During the encoding, the two color channels are low-pass filtered down to about half the bandwidth of the Y channel. This significantly reduces the bandwidth requirement compared to standard RGB. More video information can be crammed onto a DVD. Cable and broadcast TV channels can be narrower and more channels can be crammed into the same frequency range.
The display device has to convert this back into RGB to drive the individual color guns. Depending on how much you're willing to spend, you may be able to find an external component-to-RGB transcoder that's better than the one built into your TV. Economies of scale imply that you'd have to pay quite a bit, though. Many more TVs are sold than separate transcoders. If your TV also accepts RGB, then this could, in principle, produce a better image on the screen.
Selden, that's an excellent explanation, and if I understand what you're saying, it sounds like something that carried the video signal as RBGY would be better than component, but not better enough to justify the higher cost in terms of hardware and bandwidth.
The way I took what he said is theoretically, that an RGB signal could provide better color than component vid. This would be assuming your display device took RGB input, and you could find a component to RGB transcoder.
The alternative, the way you stated it Robert, would involve a new standard that carried 3 color channels and the image separately. The real question then is, as stated, would the improvement really be worth it?