SD generally doesn't look good on a HDTV. I have a HD Tivo connected to my LCD TV and I have it output 720p all the time and SD doesn't look too bad, but it's never going to look good.
Don't know what size you have or ratio check and see if your picture size is set to
Widescreen.I have a 50"4:3 RPTV and I get better PQ when the ratio is set to Widescreen.
I have an HDTV with a DTV HD receiver and an SD Tivo. When watching SD programming, I much prefer watching my SD Tivo via S-Video than my HD receiver via DVI or component cables.