Resolution is important but not *necessarily* anything to not buy a TV over.
As far as I know, almost all of the sub $4000 plasmas are 852x480. These are usually referred to as EDTV (extended definition). Most of them are HDTV ready in that they will accept a 720p or 1080i signal and yes, downconvert it to fit.
My understanding is that 852x480 is "just right" for watching a DVD through a component input. You are correct though in that it is NOT true HDTV.
There is some debate, however, about watching regular TV on one of these sets. Since I don't have an HDTV tuner and don't anticipate getting one for the next few years, I wouldn't mind a "low" resolution plasma. The general concensus seems to be that if you are talking about a standard non-HDTV signal, these lower res sets will give you a similar picture to the higher resolution ones. In the case of the very cheap high res ones, you could _possibly_ get a BETTER picture on the low res plasmas because less processing will have to take place to display the signal.
In brief: the fact that it isn't HDTV is a downside, but it isn't necessarily a show stopper. Obviously a true HD set would be preferred - the question you have to ask yourself is, would you pay $1000 more now to get an HD one if there are only 4 HD channels in your area?
But, having said all that - there is definitely a big difference in quality between the various manufacturers. That's why I'm wondering who "really" makes this TV.