My tv (a toshiba 50hdx80, from 2002) doesn't seem to have an internal scaler, at least that I know of. When I used native, the 480i and 480p looked a lot more blocky. My tv says that it does not support 720p, although I can see a 720p picture. It looks better than 480p, but doesn't look nearly as good as 1080i. I don't think I have ever seen 720p on a set that is supposed to support it. Hopefully, it looks a lot better than it does on my tv.
So in effect, I let my HR20 do the upscaling to 1080i only and turn native off.