Doubling the resolution would be quite a change, but that's still just a bit smaller than the iPad, so I can believe it.
Thats also higher res than the Droid. And I really like the sharpness of my friends Droid at 480x854. (Too bad it only looks good in the dark though! Not good in sunlight.)
An iPad-style, sunlight-friendly IPS LCD, plus super high-res, would look awesome.
And current apps could pixel-double and look no worse than they do today (which is excellent to begin with). Parts of the screen (text, OpenGL 3D) could take advantage of the new res without reprogramming, I would expect.
Maybe it'll run iPad apps!