Your friend can likely still benefit from a blu-ray player in regards to video. Probably the easiest way to find out if he would want one is to bring your player over to his place and hook it up to his TV (if you're willing to do that). I say "want one" because his ability to see a difference might not be that high, depending on the size of the display and how far away from it he sits (which both combine into the field of view). A 720p display isn't a bad idea depending on the field of view because there's a point at which humans can't differentiate between 720p and 1080p, and there's another point at which some people just won't care.
I'm no video expert, but here's my take on it. DVDs contain video in 480i, so they need to be both deinterlaced and upscaled for his 720p television. There are only 480 lines of information, so the TV (or upscaling DVD player) needs to interpolate the information to derive 720 lines of video. Blu-rays can contain video in 1080p, so some information would need to be removed, but none needs to be "guessed at" and added.
There's also the audio side of things. Blu-rays can contain the new lossless codecs (e.g. Dolby TrueHD), and some people can really appreciate a difference between those and the lossy codecs (e.g. Dolby Digital and DTS)