Upscaling/Downscaling questions ..help greatly appreciated

[adaves]

Ok, so I have a 32 inch 720p resolution TV. 720p is the max resolution for this television.

I have a Blu-Ray player and I know Blu-Ray players are meant to play 1080p resolution. My question is, if I put a DVD in my Blu-Ray player, will the player upscale the quality of the DVD? And if so, to what quality? I'm worried because if my blu-ray player upscales the DVD quality to 1080p, my 720p television isn't going to support that..so wouldn't I get an inaccurate picture?

Should I just get my player to display a 720p resolution all the way around?

Same goes for Blu-Ray discs. I know Blu-Ray discs play at 1080p resolution, so if the player is going to down-convert the 1080p disc to 720p for my television, will this mess up the original quality of the blu ray disc? Is it okay to down convert the 1080p quality of blu-ray discs?

Its also weird when I select the resolution output on my blu-ray disc player to AUTO, because the player assumes it should output 1080p to my TV? Well, my TV is only 720p. So confused.

Answers greatly appreciated! Thank you.