There is also the software to consider. Most games start life as 60Hz and then get ported to 50Hz for PAL release. Its fortunate that the 60Hz mode remains in the software (in most cases), so those with the right equipment can take advantage of it. However, with new resolutions, the problems for developers mount up. If developers had to implement different HD resolutions and refresh rates for both PAL and NTSC, then you can imagine the work involved.
If software had to support all of 480i/60Hz, 480p/60 Hz, 576i/50Hz, 576p/50Hz, 720p/50&60Hz, 1080i/60Hz and 1125i/50Hz, it would be a huge waste of disc space and development time.
Things are perfectly fine the way they are, with one exception. They need to migrate the video settings from the hardware (as is currently the case within the dash) and move the settings to software. That way you load a game and you set what resolution you wish to play it in. Sony and Nintendo already do this and it saves a lot of headaches. If you accidentally set the wrong video mode, then you eject the disc or power off. Simple.
Hopefully MS has learn from its mistake, otherwise I will be waiting for a new version of Enigmah before I will even consider buying an Xbox 2.
PS. mesnee, yip I think you'll be looking for a scaler.