the 1280x1024 will still look as good because there are that many pixels within a much smaller area (i guess it depends on the tv's size) but when you blow up an image on such a large surface it does lose SOME quality, though with high definition its still MUCH better than even a smaller standard definition tv.
i love it, at work we have this tv that clearly advertises its "standard definition" right in the upper right hand corner of the tv's plastic... its like dude, after you buy that, you might wanna scratch that off... not something to brag about... lol