LCD projection TVs are fine....they don't have the true Blacks, which is my only gripe, but the image is really nice on the Sony GWIV engines. I compared them side by side with some Sammy DLPs and Hitachi Ultravisions, etc, and the Sony XS was the better picture overall.
With DVDs, the Picture Quality really depends on the Player itself....do NOT attempt to play your Walmart $99 crapolla on these TVs. I had to really step it up to get a really nice PQ, and thus, ended up with a DEnon 3910 player. I went from a Sammy S97, to a Denon 2910, to a competition between the Pioneer 59avi and the Denon 3910 and ended up with the 3910...could not be happier....also, very Little MacroBlocking if at all. Some DVDs are trully pseudo-HD like (such as Fifth Element-Ultimate Edition, and the Shrek/Incredibles/Nemo/etc animations)