Your dvd player has nothing to do with a digital tv decoder, set top or built in.
Dvd resolution tops out at 480p. A progressive scan dvd player will look better with a digital tv. The dvd signal is de-interlaced in the player itself, before it is sent to the tv. As long as the dvd player has 3-2 pulldown (this compensates for the difference in the frame rate of film @ 24 frames per second and the frame rate of video @ 29.97 frames per second, sometimes 60) recognition, you'll get a smooth film like picture with no motion artifacts (which can be seen in the diagonal edges of images, jaggies if you will) and an increase in fine detail.
You may be referring to the newer dvd players that have DVI outputs, such as Samsung and Denon. If your tv has a compatible DVI input then the dvd player will upconvert the signal to 720p or 1080i. Now keep in mind the maximum resolution of dvd is 480p so the player can't add what is not there or make a silk purse out of a sow's ear, but the idea is to have a completely digital signal from the player to the tv, thereby insuring little or no loss of detail. Ideally these players will work better with a plasma, lcd, dlp or other fixed pixel display. Some have reported seeing little or no difference, so judge for yourself. I suspect only a hardcore videophile would notice much of a difference, or perhaps if you have a very large display such as a front projection set up.
Whenever HD-DVD come out, it will blow away current dvd's, much the way an HD broadcast or D-VHS does. One of the few currently available HD-DVDs is the newest T2:Special Edition from Artisan, and it is a true high definition DVD. It actually uses Microsoft's Windows Media Player 9 and you can only play them on the PC, and a heck of a PC at that. Samsung has said they are coming out with a regular dvd player that will play WM9 dvd's. It should be announced at the CES show in January. Microsoft is trying to get a leg up on competing HD-DVD formats from other companies. Let's hope there is not another format war concerning HD-DVD.
About a set-top box, it's pretty simple. You will most likely need an antenna, connect it to the box and the box to the tv and viola you are living the HD dream, where JAG has never looked so good. It's supposed to work that simply anyway.
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