Apple cannot advertise that it plays 720p because it down converts it into a 480, which is NOT outputting at 720. Apple advertises exactly what it displays as, THAT is what matters. Who cares if it can convert the video, it cannot OUTPUT at 720, and OUTPUT is all that matters. All you are doing is trying to manipulate wording to imply something is possible that isn't. But go ahead, keep believing whatever you want.
What do you mean "who cares" if it can convert the video? Maybe *YOU* don't care, but I sure as heck do. My 1st Generation iPod Touch CANNOT display *ANY* video that isn't within VERY STRICT resolution limitations. This is a real problem for those of us that are converting our home video libraries from other mediums like DVD (or even Blu-Ray) for the maximum possible video quality on Apple TV. I have over 300 DVDs. Can you even IMAGINE what a PITA it would be to either have iTunes convert a movie optimized for Apple TV "down" to display on an iPod Touch or how time consuming that would be, let alone how much storage space would be wasted storing multiple versions of a given film???
What I'm getting at is that at some point, THIS ALL CHANGED. I only have access to a 1st and 3rd generation iPod Touch, but I can verify that the 3rd generation iPod Touch has NO SUCH LIMITATIONS as the 1st Generation when it comes to video formats that can be displayed on it without any kind of conversion! This is MONUMENTAL NEWS for *some* of us!!!!!! I cannot even STRESS how monumental it is to NOT HAVE TO CONVERT VIDEO to get it to display on a low resolution playback medium like an iPod Touch. No longer would I have to convert movies a 2nd time to watch a movie on a flight, yet still have an optimal version for Apple TV.
I've seen NO MENTION of this breakthrough with a casual search on here or on Google. It's HUGE. It's a fundamental limitation a person has to pick when using Handbrake to convert their DVD collection for iTunes/Apple TV playback. You used to have to pick between universal compatability with the iPod Touch (and other iPods) and maximum resolution for Apple TV and other devices that have no such limitations. This is simply no longer the case with the 3rd generation iPod Touch. If you can also now watch 720P videos you have converted from Blu-Ray or other sources (like home video cameras, some of which record directly into 720P) then so much the better!
Converting video takes *FOREVER*. I spent the last YEAR converting all my movies, home movies, photos and music to iTunes compatible formats and for the most part, I will not and would not want to do it all over again. I am now glad I chose maximum resolution over a short term solution to a problem I figured would no longer exist in a VERY short time and I was correct. I want ONE video library for all devices. With the new tablet coming out soon that will also double as a massive iPod Touch (i.e. an even better home theater remote plus internet access and possibly full OSX applications), this will only become more obvious as the available resolutions increase. It's only sad that 1080p wasn't figured into the Apple TV from the start as that is the long term bottleneck for one media library for the foreseeable future and since Apple's media and backwards compatibility is riding on 720P, it's hard to imagine it being corrected for rentals, etc. any time soon.
So...who cares??? I do. Thanks to the original poster for this additional information. I just discovered the scaling feature on the 3rd generation iPod Touch a few days ago and this will come in handy as well. I'm guessing it has something to do with the OpenGL capabilities of the 3rd generation models, which can probably scale in real time. Even with the latest OS update, my 1st Generation iPod Touch cannot scale anything.
Google it then. Or wait, I will save you the trouble:
iLounge
"
Notably, the new iPods are each capable of a higher maximum resolution of video output than last years video-ready model. The iPod nano and classic now output up to 480p or 576p video when connected to the Component AV Cable, while the iPod touch and iPhone output at lower 480i or 576i standards. None of these devices matches the maximum video output capabilities of the separate, HDTV-dependent Apple TV."
But I am sure you will keep being stubborn and believe what you want to believe.
Once again, this misses the point about the scaling capability of the new 3rd generation models that makes all the difference in the world for those of us with Apple TV (in my case multiple Apple TVs for different rooms in the house). Besides, if your television (or in my case projector) has a high quality scaler, the difference between sending it 576i and 576p is virtually moot anyway. The scaler doubles it to 576p before outputting it. In short, some of you just don't seem to get the usefulness of internal scaling in the new iPhone and iPod Touch and yet seem to want to spread venom towards others that do for no apparent reason other than the fanatical trends on these forums to need to always be right and force negative opinions on others no matter where the truth may lay or how useful the information may be to other people that do care.