most of the sony sets properly deinterlace the material. while you would be better off with a true 1080p set, you won't notice a huge difference going from 1080i to 1080p.
as for upconverting to 1080p, no you can't. either your t.v. can do it or it can't.
the ps3 is still considered one of the best BR players on the market. it can play BR discs (no modding necessary). in fact, i wouldrecomend against modding because if you mess something up, discs hae the ability to reject being played in that player.
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