720p rendered games can be displayed at 1080p for most new-ish games by checking off the 720p display option in the display menu. Some of the older ones will actually kick the resolution down to 480p instead.
Nothing new, but it still works for games like Killzone 2. Kind of pointless, other than to say you're playing KZ2 at "1080p" resolution.
But really, 720p games are best viewed at their native render resolution, whether it be on an Xbox or a PS3 unless you prefer a softer image.
Personally, I'm not a fan of the Xbox approach to upscaling every game to 1080p due to the softer picture, but I leave it checked anyway for HD-DVD playback.
But a lot really depends on the size of the display and viewing distance because past a certain size/distance ratio, you're really just splitting hairs anyway.
If you really insist on playing at 1920x1080 native render or higher, you'll have to buy or build a decent PC instead. But based on the popularity of the 360 and PS3, it really doesn't seem to be a sticking point for most gamers.
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