You bring up a good point, about having 4 player split screen for mulitplayer (not 16 per screen like you say, that would be insane, but i know what you ment

). Having 4 player split screen in 720p would be a hellova hard to do. I wouldn't doubt that online (live) the most possible will be only two player split screen, and 4 player split screen for lan.
It is still amazing to me that halo 1 is able to support 4 player split screen, in multiplayer, as well as it does without hardly any cuts in the graphics.