True... but isn't that the same as saying... you can watch movies with color on a black and white television, but it will just be scaled a little bit?
Either it's 1080p, or it's not.
The difference between 1080p vs. 720p is a GREATER difference than 720p vs. 480p. (360 lines vs. 240 lines)
The point being... no matter which resolution display you buy, 1080p will be scaled down to 720p.
Personally... I notice a difference when setting my Xbox at 720p vs. 1080p on my 24" Dell monitor.
No, technically, 1080p would be scaled down to the nearest resolution. We're talking about computers, not gaming consoles.
So scaling 1080p to 1680 x 1050, you're losing approximately 310,000 pixels worth of details.
On 1440 x 900, you're losing 780,000 pixels worth of details. Or more than twice the details.
It sounds like a lot, but depending on the scene and the camera being used to shoot that scene (as well as lens and other factors) the details lost might be just excess noise, and as such, not very noticeable.
It'll be noticeable on gaming or pixel-perfect contents because those don't have noise to account for. But movies are shot with cameras, and cameras produce noise, so for movies, scaling down 1080p is acceptable in some cases.
In fact, a 1080p movie clip scaled down to 720p would still look better than a movie shot at 720p due to the same noise problem.
On your XBox, depending on the game, some games run at resolutions higher than 720p by default. I think there's an article at Beyond3D that explains this, but technically, if it's higher than 720p natively, and it doesn't have noise to account for, then displaying it at either its native resolution or higher would undoubtedly make it look better. That's not necessarily the case with movies.
That's why sometimes you see photographers scale their photos down to, say... 2048 x 1536 even though the original is something like 4000 x 3000.