I agree that iPod videos on a 46" TV might not look all that great ... but it could be OK for some.
I've been looking for a smaller TV (26") to replace the one we have in the kitchen. Panasonic makes a 720p 26" TV with an iPod dock. It's called the L26X1 and has a separate iPod dock. You can access the iPod via on screen menus.
My TV is mounted up high having a source for videos would free up the big TV when my daughters want to watch Dora and other cartoons. I would just load up an iPod (probably a Classic) and plug it in. Maybe even frame out a niche in the wall for a more polished look.
ft