I have my Atv set up to a 47 inch Sony Bravia LCD, with the resolution set to 1080p, would I be better to set it to 720p and let the set do the scaling ?
I think the AppleTV has a pretty good scaler in it, but it'd probably be better to do a test with your specific TV to see if you can see a noticeable difference. In the end, I bet you'll just set the AppleTV to 1080p and forget about it.