While I was waiting for my HD-DVD add-on drive to arrive, I did some research on getting full 1080p from my XBOX 360 to my television (since the television seemingly only allowed 1080p over HDMI, not component or the PC input port, the latter would only support more standard 4:3 resolutions according to the manual). After shifting through several, long threads over at AVS Forum, I ran across several posts about using the VGA cable for the XBOX 360 and getting 1080p that way.
So I picked up the VGA cable, which was a bit spendy at around $40 but it is the price for wanting 1080p, wired up the console and, lo and behold, it worked! Well, the console reset the resolution back to 480p/widescreen but I was able to switch it to 1920x1080. After a couple of minutes of messing around with the settings on the television, I got to the point where the picture quality was as optimal (to me) as possible.
Other than the nagging message that the television displays about an unsupported resolution (pressing the "Display" button twice on the remote would clear it) and the XBOX 360 Dashboard looking a tad blurrier than 720p or 1080i over component (then again, the Dashboard is meant to be a 10-foot UI), I was ready to play one of the HD-DVD movies that I got, "The 40 Year-Old Virgin". Sure, it's not the best movie to exploit HD media, but it was the one I threw on the table and is encoded at 1080p.
The picture quality over the VGA cable is pretty good, a tad bit clearer than running 1080i over component. Compared to other same-genre movies that I have watched on Blu-Ray, it does not look any better or any worse.
I cannot judge the sound quality as I'm using the built-in speakers for my television (I still need to run cables to my receiver after re-doing the cabling mess).
I'm not sure if I want to sit through the bundled "King Kong" movie or not, but "Serenity" is queued up for play in the next couple of days.
While watching the movie, I could not hear either the console or the HD-DVD drive, as that was one of my concerns. The same can be said about my Playstation 3, but cannot be said while playing games on the XBOX 360.
Anyway, more to come...

HD Format Wars
Hey Lihn!
At my house, on a 70" JVC, the PS3/Blu-ray wins. The HD-DVD on the 360 is just not as clear. Using Planet Earth in both formats as a test, it is close, but the blu-ray is clearly sharper, perhaps because of the HDMI.
This format war is much like the +R/-R war that was never resolved. I was a big supporter of -R, but I am using +R now to satisfy my dual-layer needs (Verbatim only). The combo players that are coming will serve the folks who don't have the gaming systems. That said, my neighbor has a stand-alone HD player that he got when they went to $299. He is also a Blockbuster on-line customer, and to his dismay, the stores are rolling out only Blu-Ray. With Universal being the last hold out for HD-DVD only, I expect things to move towards Blu-ray in the long term.
Be sure to check out Kong, it is a great transfer!
And to the poster who asked about upconverting vs Blu-ray, it is clear that Blu-ray is better, but the new upconversion software on the PS3 ROCKS! If you a newer DVD with a great transfer, the resulting upconversion looks VERY good. So, I now use the PS3 as my DVD player too. My old Sony upconversion unit does not play nice with my HDMI switch, and it never looked as good as the PS3 does.
XBOX 360 and Picture Quality
Hey James!
I agree that the XBOX 360 does not quite as crisp over Component or VGA when compared to another device over HDMI at the same resolution; but, it I think that an HDMI-equipped XBOX 360 will make up much of the difference. Outside of that, the only other variable becomes the bitrate used and limited by each of the formats. The only thing that I don't like is that the Dashboard looks a little bit more muddy over VGA compared to Component, but the games do look a bit better when scaled by the XBOX 360 to 1080p.
A lot of people seem to poo-poo Blu-Ray since it is tied to Sony (which hasn't exactly been pleasing a lot of geeks, mostly due to the rootkit incident with some of the Sony/BMG CDs; and Sony isn't the sole participant or owner of Blu-Ray either) and many point to the overall higher cost that has been related to Blu-Ray. At this point, there is a slightly higher inherent cost to Blu-Ray when it comes to the equipment and the production of the discs. Blu-Ray almost seems like the +R while HD-DVD almost seems like -R of the HD formats :)
I still haven't played a DVD on my Playstation 3, but the upscaling of PSone and Playstation 2 games makes playing Final Fantasy X a little more bareable on a larger screen.
HD-DVD
So... how much better is the HD-DVD than standard upsampled DVD? Very noticeable, or just slightly better?
HD versus Upsampled
While I haven't tested how well the XBOX 360 upsamples regular DVD movies, I would have to say that HD-DVD and Blu-Ray looks better, though it is hard to compare the same movie since I do not have DVD and HD of the same movie.
A couple of things that I noticed when starting to watch movies or documentaries on HD media instead of OTA HD or DVD is that most of the image looks crisper and textural items do not look as muddy. The other thing that catches me is that scenes with a lot of small objects, like capturing a hurd of animals running across a plain from a helicopter, stands out a lot more.
For me, the stand-out examples are the science/nature documentaries, particularly "Planet Earth". It would be interesting to compare "The Matrix" on upsampled DVD versus HD-DVD or "Lord of the Rings" when it is released on HD. I am also wanting to see how much of a difference a Pixar movie would look like on HD, particularly "Ratatouille".