The players aren't capable of 720p or 1080i, displays are. DVDs are 480p (now considered ED or 'Enhanced Definition'. The TV or a scaler that precedes it will scale the 480p (or 480i in interlaced mode) up to the native resolution of the tv, but the source from the dvd was only 480 lines.
DVI and HDMI are the means of getting the digital signal to the display device and have no relation to 'High-Definition'. A DVI connected dvd player can send 480p from a dvd just fine.
HD-DVDs will have the video on the disc in a high definition format already, so the source of the video is HD, just like if you were to receive a HD signal over the air or from cable/satellite.