ps3's blueray downscales to 480p?

well i was planning on buy a hdtv for my ps3 about 32 inch or 37 inch, which was hd ready at 720p. but i heard that if you play blueray movies on ps3, it would just down scale to 480p which is about standard tv pixels unless i have a tv that supports 1080p.

so i was wondering, was this all jus rumours or does it really downscale it. is it really worth me paying some more to buy a 1080p one?
i also found some proof

http://www.avforums.com/forums/showthread.php?t=501339
here is a another one.
btw this wont put me off the ps3 because it's just the best

http://loot-ninja.com/2006/11/19/ps3-hd-scaling-issues-other-annoyances/

If you connect the ps3 to the hdtv with an hdmi (for best 1.3a cable) it will play blueray movies in hd 720p or 1080p depending on which hdtv you own. If you connect the ps3 to the hdtv with just the av cables that it comes with, those cables can only carry 480p output to the TV.

It looks like with the original ps3 this was the case, but those links are old and a newer firmware has been released, and is in all newer ps3s which solves the problem. So it now does display at 720p or whatever the best setting is for your TV.

Why would it downscale to 480p? sounds like an Xbox fanboy been tell you lies.

If you don't have 1080p it downscales to your TV's max rez.... which would be 720p on that tv your talking about.

The PS3 will always do it's best but it will be held back by your TV.