You won't see any advantage from progressive output unless your TV takes 480p ie is HD (truly SD) compatable. Otherwise you will only see the difference between the S-video or component outs... whichever you use.
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Using a DVD Player like the Pioneer Elite DV-37 will not be considered overkill by using it with the 36-Inch Toshiba Television like you are talking about. I have a DV-37 myself (which is now hooked up to my audio system (a KEF Reference 102/Adcom GFA-545 MkII/Adcom GFP-750/MIT system) and being used as a CD Player (and a damned good sounding one too)), and before moving it out of my home theater and connecting it to my audio system a few weeks ago, it was used as a DVD Player for the last seven months. And it was connected to a Panasonic CT-27SF37 27-Inch Television. I have gotten nothing but great results when I was using the Panasonic CT-27SF37/Pioneer Elite DV-37 tandem. That was a great combination if you ask me. The picture quality from my "Panny" has never been better. So, if it can work flawlessly with my 27-Inch Panasonic, then I don't think there will be any problems with the DV-37 when it is hooked up to your 36-Inch Toshiba. Combine the Toshiba Television and the Pioneer Elite DV-37 DVD Player with the Marantz Receiver you are talking about, then you will already be on the road to having a killer home theater system.
Of course it will work, but you won't see any difference unless your monitor is HD capable (and MUST have Component Outputs [3 rca fittings, r,b,g]).
The DV-37 is a great unit, but there are many caveots about how well progressive scan is implemnted. Read about the progressive scan upgrade from Proceed to realize how complex the problem is: http://www.proceedaudio.com/PVP.html
Keep in mind that the best deinterlacing chip is the Sage/Faroudja, which is used in some Panasonic and Kenwood models. The Pioneer and Sony models have the chroma bug very bad and have poor deinterlacing engines. If you want the best picture possible with video sources go with the Panasonics or the new Kenwoods.