There is one other option that no-one has mentioned.
Apple could release a widescreen version of the iPad.
Then they could do a 1360x768 resolution.
Say around a 12" or 13" size. Like the screen on a netbook.
This would not break any apps, but would then allow movies to fill the screen.
Web page browsing could use the extra space.
Current apps would just have a narrow black bar on two sides as the only drawback.
And at the same time allow full 720p widescreen playback.
Apple could release a widescreen version of the iPad.
Then they could do a 1360x768 resolution.
Say around a 12" or 13" size. Like the screen on a netbook.
This would not break any apps, but would then allow movies to fill the screen.
Web page browsing could use the extra space.
Current apps would just have a narrow black bar on two sides as the only drawback.
And at the same time allow full 720p widescreen playback.