In order to display any signal, your DLP TV must scale the incomming video signal (and sometimes deinterlace) to its native resolution of 720P. Thus 1080i and 480P signals and scalled and 480i is deinterlaced and scalled by your TV.
The feature on the new Yamaha 2600 (or an upscalling DVD player) allows the receiver to do the upscalling to 720P, the native resolution of your set. If the scaller in this component is better than the one in your TV, then you will see an improvement.
