My microHD was set to the default video setting 1080p with the firmware that was shipped with it. My tv set handles 720p natively and 1080i with hdmi. I got a signal right away on my tv regardless, and was able to use it. I do though suggest the default to be set at say 480p, and then it'll even support OLD plasma's with component, if they use an HDMI to Component adapter.
Then again, IF this setting also controls the composite output, then it definitely would be best to set it to 480i natively. Otherwise people going composite with an OLD tv set won't get anything.
One last thing: when this setting is changed, PLEASE have a confirmation screen to click an "OK - this works" (ala Windows), OR have it time out in say 20 seconds and go back to the default! When I changed it to 1080i, it blanked out for so long, I though I was screwed. It then finally came back up. So, I'm not sure if my tv was just taking it's sweet time hand-shaking, or if that time-out feature already exists.