Unless you did something to modify the actual code there are a few problems:
1) The reactor scene is in the bios - it loads before the dash and video settings are ever viewed. The bios is always 480i. Myself, Ngtshd, and others have found no way yet to change the bios to 480p no less 1080i. I also have the 1080i option selected in my dashboard and I can verify that the output is still 480i for the bios (my television tells me extactly what signal it is receiving).
2) The Xbox dash is also always 480i. It is totally independent of the video settings. This causes tons of people with front projection and a few rear projection sets problems since they cannot view the dash through their component inputs (this is very very well documented and some elaborate workarounds are out there for it since they can only recieve 480p, 720p, 1080i). If the dashboard could be altered by just changing the video settings this wouldn't be a problem and this is exactly why this group bitches like hell at MS. The only way to change to dash is to hex edit (and thus it becomes unsigned requirig modchip). So far - no one has been able to edit to to produce anything more than 480p. Not that I'm an expert programmer but a 720p/1080i image would have to be coded specifically - the Xbox does not have scaling functionality for these resolutions.
So unless I've drastically misunderstood what you are saying, I can assure you that changing the video option in the dashboard has absolutely no effect on either the bios graphics nor the dashboard itself. If there was something else you did, please let me know.