You're on the money, Koz, except that the thing about the content providers not wanting to lose control of digital content is kind of non sequitur to this discussion.
In SoCal I have a 42" plasma and a 50" 1080i DLP that I'm happy with. Mostly, we watch 480i cable, the occasional 1080i HD cable, and DVDs (e.g. 480i) that the monitors upconvert. The difference between standard definition and extended definition is HUGE. The difference between extended definition and high definition... not so much.
Before I bought the 1080p monitor in San Francisco I did a lot of eyes-on comparison shopping. The reason I went 1080p was the lack of pixelation... future proofing was way down the list.