I don't think reviews are confusing these abilities, the distinction should be obvious from mentioning the display resolution.
the MobileCrunch review says:-
"The iPhone 4 can play 720p files up to 30FPS, but HD output would have been nice as well."
"as well" implying that it can display HD content natively.
And then they say, (in relation to the double resolution screen):-
"Expect “HD” upgrades for your favorite apps, though, and expect to pay"
That would confuse many an average Joe into thinking they were getting a HD phone.
http://www.mobilecrunch.com/2010/06/07/everything-you-need-to-know-about-the-iphone-4/#more-33121
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