So I ended up uisng the ps2 as my progressive DVD player (the new slim one) and I returned my panasonic DVD player (S27) . I did this to 1) use one less component cable and 2) save money.
However, now I've noticed that my latest 2 rentals from blockbuster look "yellowish". Also, during the ps2 setup screen, I notice some horizontal lines that happen every now and then. All the component settings are correct, although I did add an Onkyo receiver on the shelf below the XBOX (the slim ps2 sits on top of the xbox).
Could anyone have a guess of whats going on? I was thinking maybe the Onkyo throws off major interference for the ps2 (although xbox is unaffect) or that ps2 progressive just sucks!