Display settings for DLP

[walmat]

Hi All,

In my endless quest to maximize the picture quality of my old 1280x720 DLP I have made some recent observations that contradict conventional wisdom.
For example: I've always had my ps3 output 720p to my TV because 720p is its native resolution and it should look its best...correct?
What I found using a calibration disc is that using 720p cuts off a portion of my picture and the 1080i [setting actually gives more picture information plus I found more fine detail with 1080i.
Have I been wrong all this time???
Can someone explain to me why this happens and whether 720p is in fact better?
Thanks in advance for your help.