WD HDTV Media Player vs Oppo 981

Pardon my ignorance as I am pretty clueless to all this.

All my HT gear are obsolete. My projecter is 720p without any HDMI input(only DVI and component), my AV processor and 5-channel amp don't have HDMI and all my 3 cheapo DVD players do not have HDMI either.

I know I cannot achieve full HD 1080p playback via my obsolete 720p projector, but which route will yield the BEST picture quality? :-

1) Playing HD Material via WD HDTV Media Player.
I don't know if the 1080p signal can be converted to 720p but there is a problem since this player does not have component output to my projector. It only has HDMI and composite outputs(the red and white RCA connections for audio and yellow RCA connection for video) which is much inferior to component or HDMI. Is there a HDTV player that have component outputs?
Western Digital HDTV Media Player

2) Forget about HD and get an Oppo 981 player for superior video playback via upconversion from 480 to 720p for normal DVDs. All my three DVD players are less than $100 in the current market.

I don't plan to upgrade my projector or AV processor/amps for the time being.

Any advice would be most appreciated.