There are no HD DVDs yet. Some players will upscale to HD resolutions, but DVDs are encoded at 480i or 480p and there is no standard for HD-DVD source material.
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If you are interested, there are threads on AVSForum where this is being tracked. Last time I checked, there were still two potential competing standards, and I didn't think that any of the DVD Player mfrs were putting either format in their machines. In other words, even if a DVD player outputs 1080i or 720p, its not engineered to read 1080i or 720p off a disc. They just upconvert the signal. Seriously, HD-DVD is crack to videophiles--look through the threads and you will get the latest scoop:
The model you saw is probable the LG3510A, which will output OTA high definition signals through either a DVI-D or component connections. The nice feature about this unit is that if your video monitor only has one DVI input, you are essentially inputing two sources with the one connection. The image quality from the component out for both the high definition signal and for DVD's is very good. Like the other posts have said, there are no HD-DVD players yet, but if you are in the market for an OTA high definition receiver, for the cost of this unit, you are almost getting the DVD player thrown in for free, especially when you consider that you won't need to buy an extra aftermarket cable. Good luck with whatever you decide to do.