Although I normally agree that the TV's internal upconversion should be just as good (or better) than another device, I have found one TV in my house does a horrible job of it. It's a non-Aquos Sharp from a few years ago, LC42SB45U, and the 1080i image on HD channels is not good. Have tried both Component and HDMI. If I play blu-ray movies or games on PS3 thru the same HDMI, things look pretty good. So whether it's just the higher bitrate, or a 1080i to 1080p upconversion issue, I'm just not very happy with how the 722 looks on this TV.
Somewhat related, when we had a free PPV movie via Dish, I noticed some were listed as 1080p. Is that truly a 1080p image, or other processing to trick us. Because if the 722 can display THAT in 1080p, I don't see why it couldn't upconvert everything passing thru if we wanted to. May be just need to have something modified in the software to enable the option.