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Sardauk said:

Yes you are right. But why can't I have an upscaled image for KZ2 then ? (Note that KZ2 is still tucked on 720p on my TV... or am I confused ? It runs the XMB in 1080p then switch to 720p when I start KZ2)

You didn't get what he said then. Your Killzone 2 is upscalled but by your TV not your console. The TV says 720p because this is the resolution of the signal its getting.