Your TV may accept the higher resolutions but if you can see no difference in picture quality, by all means tune the SD channel and use 1/4 the drive space for recording.
Just reread and noticed you have not hooked up component, so you were using composite which only outputs 480i regardless of the HR settings.
Just reread and noticed you have not hooked up component, so you were using composite which only outputs 480i regardless of the HR settings.