Much like looking both ways before crossing the road, remembering to read the fine print is a valuable life skill that will inevitably save your existence at one point or another. Some even consider HD resolution to be a matter of life and death, especially when the money spent on a 1080p television could have been used to purchase New Zealand instead. When Microsoft announced earlier this week that an update would automagically enable 1080p resolution ("true" or "full" HD if you believe in such things) for the Xbox 360, they neglected to mention any specifics regarding component output and that pesky issue of copyright.
A Microsoft insider (with handle "amirm") provides some clarity on the AVS forums, explaining what types of content are allowed over a component connection. If you insist on watching your HD-DVDs at full resolution, it appears you'll have to invest in a VGA cable (and not an HDMI cable).
If your 360 is hooked up via component cables:
Xbox 360 games can be upscaled to 1080p. Titles that run in 1080p natively (none of which currently exist) will also display without a problem.
HD-DVDs will display at 1080i maximum -- you can thank AACS for that.
If your 360 is hooked up via VGA cable:
HD-DVDs, Upscaled DVDs and games can all display at 1080p with no copyright hassles.
If your 360 is hooked up via RF Adapter:
You have bigger problems.
[Via Engadget HD]