That looks normal - any Dish ViP box can negotiate with HDTV set for 480i/480p/720p/1080i resolutions. As described before they checking for 1080p only when you have the movie downloaded and attempt to play it, it's one shot routine.
Basically you can catch what's going on using your HDTV remote and press Info button during that specific time.
OK, that make sense that the HMDI diagnostics would only display the previous non-1080P resolutions for now.
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The information displayed by the TV Info button is already being displayed during the resolution test (I checked with the TV Info button). However, let me be more precise as to what's happening.
Just before the resolution test, and while the Guide info with the test dialog is showing, the TV Info shows "1080i". This is expected.
When the test starts, the TV Info "1080i" goes to "--", then TV goes black while displaying the message saying "An incompatibile video signal has been received. Check the output device settings" for about 3 seconds. The TV is generating this error message, NOT the 722.
The message goes away and the TV screan stays black for about 5 seconds.
The same message is displayed from the TV again for another two seconds, and for this entire time, the TV Info is still "--".
Finally, the Guide info with the failure dialog appears, and the TV Info goes back to "1080i".
This whole process tells me that the 722 is sending test 1080P signal to the TV that the TV doesn't understand. Hence, the TV won't tell the 722 that it got a good 1080P signal. What would be wrong with the 1080P signal the 722 is sending, when (as I said), my AppleTV and (borrowed) BD player works just fine with 1080P?