1) There are an increasing number of LCD panels with full 1920x1080 resolution. Even the on-line Wal-Mart catalog offers three. Yesterday I received a mailing from Circuit City which listed 6 "1080p" sets.
2) Even if a set's maximum resolution is 1366x768, true HD will look noticably sharper than down-rezzed 1280x1080 HD-lite. This is because your HDTV is downconverting the 1920x1080 to its native resolution. If you remove 1/3rd of the original information, which is what 1280x1080 is doing, then the TV's downconverter has less information to work with.
2a) The over compression by Dish will cause a 720p set to show just as much macro-blocking, contouring, and motion blur as a 1080p set.
Thus a true HD image transmitted with high bandwidth will look much better on a 720p HDTV than one that is down-rezzed and overly compressed.
3) There are even more DLP 1080p sets coming out. And prices are dropping.
If you look at small LCDs then you won't find them with 1080p. Not much reason to go over 720p for a 26" TV.