Panasonic DVD-S52S
I read up on it. It is bashed all over the net for horrible image quality. I'm just saying. If you had a expensive DVD player. (or a PS3) Your image would look alot better. :)
EDIT: You say it would look better on a SDTV tube with the blurring. I have played with that TV you have in specific. I infact, played with one on the same sale I think you got yours on. :P
The TV is extremely similar to mine. It is basically the best 32inch LCD on the market, besides the sony... with is trivially better.
I promise you. The problem is your DVD player is outputting crappy image, and your TV is doing what the DVD player is telling it to do. Try hooking it up with component. If you can notice bad image quality with HDMI... It can look better with component, as it tends to 'blur' the image.
EDIT: If I had a DVD in the room I was in, I would take a 10.2MP picture close enough to the TV where you could see each of my 1080p pixels :P and see that you shouldn't see blockyness. But all I have in here are my BluRays. 
PSN ID: Kwaad

I fly this flag in victory!







