Except that answer has been amended to say:
Akita: Does the PS3 upscale or output all PS3 games to one resolution the user sets in the dashboard? This is a very important question for me also. My TV only displays 480i/480p/1080i. If 720p native games are going to be scaled down to 480p, that would royally suck.
IGN: Originally we said yes to this question, but in hindsight it looks like we misinterpreted it. The short answer is that if your television doesn't support an HD resolution set in your dashboard, it automatically outputs the signal in 480p or 480i