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No direct personal experience, but a friend has told me this, and he is a realible friend.
For best picture from an upscale DVD player, run output HDMI from the player to input HDMI on the HD-TV.
Get the next generation HD-TV than can handle 1080p
We are both looking at a Sharp LC-42D62U LCD HD-TV. It's worth mentioning that the Sharp also accepted 1080p sources via component-video, a feat no every 1080p HDTV can match. (42 in on sale at circuit city for $1599. this week only.)
And yes, you can see a difference from SD mpeg2 video to upscale viewing on the HDTV.
Depends on the TV. What is it's native resolution? How large is it? If the TV is native SD, then (assuming it accepts HD inputs), then you won't see any improvement. If it's HD (720p, 1080i/p), and quite large (say 42" or above), then it should help.
Note that some high end TVs already have great built-in scalers, that are already converting the low res DVD to the native res, and with suitable post-processing to enhance the picture. But in most cases, the DVD player will win because it will have a dedicated upscaling chip that is designed for upscaling DVD content, with post-processing techniques to enhance the picture.
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