That was my thought MDS. I have a 42" plasma with a 1024x780 resolution. While the TV, in theory, had the minimum number of lines for 720p, it resolution differs from 720p's predicted resolution (1280x720?)
Also, component signals are not digital so they still need to undergo some conversion to map the analog signal to an addressable display.
I believe, for best results, you want to translate the compressed video stored on the compressed media to a digital stream that matches the display's resolution and to send that over HDMI. I would guess that people with 1080p displays and a 1080p player using HDMI are going to come as close to that ideal as possible.