An SD signal will almost always look worse on an HDTV than it will on an HDTV. It's like listening to AM radio- if it's a basic radio and speakers it doesn't sound too bad. On a $3000 stereo system it sounds like crap.
Me, I would hook it up the way you have it; allowing the TV's internal processor take the analog signal and try to clean it up. Others will tell you to use an S-video cable to take advantage of the higher quality signal.
My bottom line; week 3 of the NFL and NHL just about to start- the time is now to get an HD box. Even if it goes on the credit card; the interest you pay will be worth it. Or go with Shaw's no interest plan.
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