i still think this has to do with hdmi. the ps3 would be sending a 1080p signal, which could be convered to 1080i if you were using one. if not, you're not getting a 1080p signal to begin with to downconvert, and thus the only option is 480p.... i "think"
i may be wrong, but if you are not connected with hdmi, then the ps3 is not sending a 1080p signal to your tv to begin with, and thus the only choice on your tv is 480p. if it had 720p, then the component could handle it. this is all assuming you are not using hdmi however, if you are, i have no idea
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