Here's my two cents:
I have a 360 that's connected to my projector - it's sweet at 120" - and for my day-to-day gaming, I am on a 22" LCD via VGA. I run both at 1080i and you can tell a huge difference. My projector, a Viewsonic PJ501, supports up to 1080i and trust me ... at 10', it's a work of art. As far as 720p looking better than 1080i, I don't see what folks are talking about.
As far as HD movies, I do have a Dish HD-DVR and it's pretty sweet. Running at 1080i, it's as sharp as the X-3 BR I saw running on a Sony 61". I was trying my best to see the difference between my setup at home and the Sony BR setup. Very, very minute, at best.
I have been thinking about buying an HD-DVD for my 360. It makes a lot of sense for me, because it's gonna be a long, long time before I get a PS3 and BR ...
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