TV's never do as good a job as the receiver at conversion.
False: The Dish Network receiver uses a broadcom chipset for all of its HD processing.
Many tvs and projectors use a Faroudja, Pixelworks, or HQV video processing chipset to name a few and do a much better job of scaling a video signal than any Dish receiver could hope to.
1080i is still 1080 and has more REAL pixels of content than 720p.
If your display looks better with 720p, go for it.
My 8 foot screen looks better with my Dish receiver set to 1080i.