The iPad VGA out adapter on a stock iPad with iOS3.2 only supports the video out of the application supports sending the signal. This works in Apples Video app, Photos app. Its pretty limited unless you find the right app to support it, but it works really well.
Since the original poster mentioned using the BTStack, this is only available if you've jailbroken your device and in doing so you also have the option for installing/purchasing an app called "Display Out". It supports sending your Springboard and any app to an external display. In practice it works really well, although on fast games it seems to have 'stitching' or 'tearing' issues with the moving images. Its not horrible, but is distracting and the framerates are really good (unlike the wifi remote display options out there). This installed 'hack' allows for 1280x720 resolution for the springboard, it also takes care of the issue discussed in the paragraph below re: video playback. I think Display Out is $2.99 from within Cydia.
Just a note, the Videos app supports sending the video files, but if you place a 1280x720p video it WILL NOT PLAY AT FULL RESOLUTION out of the VGA adapter. They are dumbing down the resolution to something lower which I haven't checked. It still looks pretty good, but its not ideal. It is ONLY a limitation imposed on the hardware as the iPad plays the file fine at its native resolution (and simply scales it to fit into to built-in screen). The VGA out downscales it and even if your display is capable of 720p it will not send that signal.
From what I've heard, the component adapter may output the 720p signals to a display. I don't have experience with it to confirm, anyone who has tried this would be helpful to post their results. If you have a VGA input on your display it would probably be easier to set up as:
iPad->VGA adapter->Display
rather than:
iPad->component->DVI adapter->Display
(although the latter is more flexible for connectivity with DVI and/or component options. If you need one or the other as VGA is becoming less used in displays and hardware).