sorry for confusion. clarified in OP

This is basically how it is. Most TVs adjust any TV resolution to their native output without user intervention. Some will take most computer resolutions, too. A few older TVs do not accept certain resolutions because of the marketplace at the time those models were made. But that is growing pains as the market switched from SD to HD. I'm not sure where you see the problem.

I'm not sure what the PS3 1080i issue is, but there will always be varying quality levels. You sound like you want all scalers to be great at scaling. But companies are too cheap to put quality into everything, and many consumers are too cheap to pay for the better ones that exist.

There is also the issue that HDMI goes through a handshake, and some equipment is flaky when doing this. This is also a quality issue, as their firmware is not good enough. But the intent of HDMI is still exactly what you propose, to simplify everything.

The PS3 issue is that if you're TV cannot accept 720p then it will downgrade it to 480p rather than upscale it to 1080i. That's how I understood it anyway, and I have no idea how many TVs that affects.

That would be annoying to certain older RPTV owners. But it is still just a lack of quality. There are many TVs (current ones, not obsolete models) that do this in order to create 1080i from 720p. They chop down to 540 and then interlace/double to 1080. Cheap, cheap, cheap. So it may not be all that different for any 1080i TV owner.

So, recap of video for this game generation:
360: No HDMI. No 1080.
PS3: No 1080. And no proper scaling to 1080.
Wii: Not even 720, let alone 1080.

Obviously video is not a big concern. I think we just have to not worry about it at this point. Worry about video for movies, instead.

Where are you getting "no 1080" from for 360 and PS3?

The games.

There are 1080 games coming out, they're just few and far between. NBA 07 on the PS3 is a 1080p game. It may look awful, but it's 1080 progessive lines of awful. I do remember Microsoft announced some game or another would also be natively 1080p.

One thing I wish they would have done is require the players to remember preferred audio tracks. I can understand making DD+ the default track, but it would be nice if we could select a track like TrueHD and check a box to have it play automatically the next time the disc is inserted. If they can have persistent storage for bookmarks, they could do the same for audio tracks.

Also, the menu button sounds were not needed at all, but they should have made these defeatable in the players' menus. Making the selection stick on the discs' menus would have been good, but not as good as having an option to turn them off for good in the player. As it is now, you have to turn them off every time you put the disc in, so you might as well leave them on.

The bookmark feature is nice, but they should have also made returning to a bookmark as easy as pressing one button. One of the A,B,C,D buttons (on HD-DVD players) could have been used for creating a bookmark while another would bring up that bookmark.

Been wishing that for years on DVD players, too.

720p gaming is probably going to be the norm for some time. The developer of Resistance said flat out that they would have had to make a lot of compromises to the game to get it to run in 1080p. Even the PS3 has limits. You pull the processing power for 1080p you have to lose it somewhere else in the game.