No it would be awful, 720p over 32" screen is incredibly blocky, even 1080p at those kind of sizes isn't very nice. Proper PC monitors at 30" tend to be 2560x1600 to give you some idea how how low 1280x720 is in comparison.
The real issue is viewing distance. A 30" monitor at 2560x1600 is going to be 1.5 to 2' away. A 32" TV at 1080p could be 3-4' away and look great. I agree that a 32" at 720p would look awful (unless 5+' away, at which distance it would be too small). There can also be resolution problems since 1366x768 is not a stand PC resolution. If the OP has enough desk space, then 1080p might be a viable resolution (native 1080p, not 1080p input such as the OP's link).
OP, I paid $380 including tax and shipping for a 32" 1080p TV with IPS panel 2-3 years ago. I wanted an immersive gaming monitor. My choices in that budget were a 24" computer monitor or 32" TV. I actually bought a nice Dell 2408wfp, but it wasn't immersive, even if I sat 1.5' from it. I sold it and bought the 32" TV, and like it 100% more for the exact same price. The only other option in my price range was a 28" TN monitor, but I hate TN panels.
I use it as my gaming monitor about 3.5' away. It looks great at that distance. Some people can handle being about 2' away, but IMO 3' would be the absolute minimum for the "low" resolution for the screen size. If your desk isn't deep enough to have the screen at least 3' from your eyes, then I wouldn't go the TV route.
Also, when looking for a TV to use as a computer monitor, there are many things to consider. What is the input lag? It will be lower on an IPS screen (what I have) than a PVA or MVA screen (what I think your link is). An IPS screen will have 178° viewing angle.
Can it do 1:1 pixel mapping? If it can't, then it's an absolute no for computer usage. In layman's terms this is turning the scaling off so that it displays the 1920x1080 perfectly, pixel by pixel.
To a lesser extent, displaying font is a problem with many TVs. I had to play around with my settings a lot to not have blurry red fonts. I notice it more in regular desktop use, but I have noticed it in a few games as well. It's hardly noticeable since I got the settings how I want them.
To summarize, definitely don't get the TV in the OP. Measure your viewing distance from your normal gaming position to where your TV would be. If it's less than 3', don't get a TV. If it's more than 3', then research 32" 1080p TVs with IPS panels that can do 1:1 pixel mapping and don't look like crap when hooked up to a computer. Here's a link with lots of good info on using TVs as computer monitors:
http://hardforum.com/forumdisplay.php?f=78. It's where I found most of the info and settings for my TV.
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