Hi Romulus, Let me try to explain it, as I also have a 1080i LCD TV. Resolution is measured as interlaced (i) or progressive (p). 1080i = 720 p, which as you can see is 360p less than a 1080p TV. This difference is noticeable on televisions that are 42 inches and larger. A standard DVD can provide 480i and a progressive scan DVD can provide 480p which is quite a noticeable difference. An upscalling DVD can ge to 1080i or 720p but this is not "true" resolution as these players interpret and add false lines of resolution to give the perception of increased overall resolution. Blueray, however, provide a true 1080p which is clearly sharper than the upscalling DVD players. Now to answer your question, if you hook up the Blueray to your 1080i TV, the highest resolution you can hope to get is 1080i or 720p but you will never get the full 1080p unless you purchase a 1080p TV. Again, I would say that unless your screen exceeds 42 inches it's not worth worrying about too much. Go ahead and get the Blueray, as you will still see an enhancement over upscalling DVD's and get all the addional features but the other benefit is getting the new master 7 channel sound formats (Dolby TrueHD, DTS Master) through the Blueray that are hands down of much greater quality and realism than any other surround sound format.
Sure it will, but it will only broadcast in 1080i. Yes it will look better than your DVD, which is dealing out 480 if its just a regular DVD player. That's the same res as non HD Cable.