I disagree with this. My reason being that what I like about HD video is pixel for pixel matching with the resolution of a screen. So for example a 24" imac has a resolution of 1920 x 1200 and a blu-ray video has a res of 1920 x 1080 so it looks great an un-stretched on a 24" monitor.
My monitor is 1280 x 1024 and dvds do look stretched on it and 720p looks perfect and the resolution matches my monitors pixel width (1280 x 720). However 1080p video would be overkill, but it is not to do with screen size in my opinion.
Thank you for educating me. This makes sense and I understand what you are saying