On a good EDTV, an HD source will look MUCH better than a SD source.
In fact, on a good EDTV, such as a Panasonic 42" ED Plasma with good black levels, most people can't tell it isn't HD from a distance of 9' or greater.
I saw this tested at a CEDIA a few years back. Panasonic had both 42" ED and 42" HD plasmas sitting side-by-side and had line on the floor at 10' away. Fewer than 5% of the viewers were able to see a difference.
A 42" ED plasma can be a very good TV. It is perfect for DVDs, it is better on SD than most HDTV sets, and as the lower res ED sets usually have better black levels, the blacks and colors are better on them. But they can be nasty if you sit less than 8' away, as the screen-door effect becomes very obvious.
Cheapo 42" plasmas can also be nasty, as some are just cheap TVs with all around poor performance.