What are you comparing it to, though?
To itself mostly. The 360 makes it pretty easy to test this. Once I got the 1080p tv I had to decide whether to keep the 360 at 720p, or set it to 1080p. So I tried both modes. Because of the 360's hardware scaler, it makes it easy to see the quality of the tv's scaler. I checked on both the dashboard and on games, the comparison being:
1) 720p source -> 360 hardware upscaled to 1080p -> result displayed on 1080p tv
2) 720p source -> tv hardware upscaled to 1080p -> result displayed on 1080p tv
I thought it would take a lot of back and forth to decide which way to go but that was definitely not the case. The 360's scaler is much better than the one in the Panasonic P65S1, on both the dashboard and games, it was no competition. So I set the 360 to 1080p output and all my games are razor sharp. Well...non 600p games that is, MW2 still looks soft.
I finished Assassins Creed 2 on 360 on this tv and it looked super sharp all the way through. Then I switched to Uncharted 2 on PS3 and that's where UC2's softness hit me like a ton of bricks. It simply didn't have the sharpness that AC2 on 360 did. So I a/b'd 720p and 1080p on XMB on the same 1080p tv and the blur was just as obvious as it was on the 360. Except in this case there is nothing I can do about it because the PS3 has no hardware scaler, so I just finished UC2 having it looked soft.
I have two other older tv's as well, a Panasonic 50px60u and a Panasonic 42px60u, both 720p tv's. I tried UC2 on both. On the 50" Panny it got it's sharpness back, UC2 looked sharp and actually looked better on that older 50" 720p tv that it does on my new 1080p tv. This is in contrast to the 360 which looks better on my new 1080p because of it's hardware scaler. I also compared UC2 on the 42" Panasonic to the 50" Panasonic but the 42" didn't look as good, it looked a bit grainier.
I've have done similar checks in the past on tv's at work which are a mish mash of brands, with similar results. The conclusion is that while tv scalers are probably acceptable for most, they still soften the image when doing the 720->1080 upscale, and they are clearly worse than the 360's scaler, for games anyways. I've never had Pioneers or Sony's at work though so I guess I would need to check those someday for curiosity sake.