As an Electrical Engineer working on HDTV design for 9 years, there is so much for me to say on many levels of these subject matters. But I would end up creating a post the size of a novel in the likes of 'War and Peace'.
In a nutshell here are some rules that you should know. Print this out for future reference.
1. HDMI is 100% backwards compatible with later versions of HDMI. HDMI ver 1.0, ver 1.1, ver 1.2 are now out in the markets. ver 1.3 will be out in mid 2006.
2. HDMI is only 50% backwards compatible with DVI ver 1.0 (the one and only version made). HDMI ver 1.2 and ver 1.3 will be the only versions that will be 100% backwards compatible with DVI. HDMI ver 1.1 and lower is most likely not backwards compatible with DVI. The symptoms usually is a signal may black out after a few seconds, a picture scroll may occur or a blue screen may stay on.
3. Some earlier DTV and HDTV have DVI inputs in 2003 and 2003 models. HDMI inputs has now taken over in 2005 and 2006 models.
4. Sone earlier set top boxes and dvd players have DVI outputs in 2003 and 2004 models. HDMI outputs has now taken over in 2005 and 2006 models.
5. Some HDMI outputs on dvd players and set top boxes cannot upscale to 1080i. Some cannot upscale to 720p. However, most will be able to upscale to 480p and even 576p. These types usually are lower end dvd players. The ability of the HDMI output to upscale to 1080i depends on the sophistication of the dvd player for instance with the high end DCDi Faroujia motion adaptive de-interlacer and the HDMI discrete 10 bit dac/adc circuits on board.
6. The best choice is to have a digital output from the set top box or dvd player to the digital input on the DTV or HDTV. The problem usually occurs when one has an HDMI and the other a DVI connector. It doesn't matter even if you use an HDMI to DVI cable or converter device, if the versions don't match and are not backward compatible as referenced in points 1 & 2, then you will most likely experience a variety of problems.
7. If at all possible match up a DVI input with a DVI output, and an HDMI input with an HDMI output. This would give you the best chance of full operability. Of course a component video is not compatible with any digital input/output such as DVI nor HDMI. Use it only as the last resort as this is an analog signal that is much lower quality and inferior to any digital signal.
8. Most digtial cable and satelite subscribers complain about the standard or normal channels being of low quality with lots of noise. And they find that the premium or pay channels have the best quality picture. This is because the pay or premium channels are broadcast in a digital mpeg format with a much higher ATSC resolution. And its signal path to your house to the set top box and to your HDTV is mostly all digital. However, the standard or nomal channels are just re-broadcast from their old former NTSC analog formats of lower quality and then digitized. When any old low resolution analog signal is digitized, it make a very accurate copy of the signal along with any of the inherent noise and artifacts imbedded with it. And when it gets to your home into your set top box and to your HDTV through a completely digital path, it does a good job in retaining all of that noise it copied when it was digitized. The digital circuits don't know that it is noise and artifacts. It just knows it must keep the digital data signal integrity like a computer does so it keeps the noise. It never gets filter out in a complete digital path. However to resolve this, you should use a component video cable from the set top box to the HDTV only for standard or normal channels. This is because the analog signal path provides chroma and noise filters that are standard in analog circuits. This helps clean up the noise when the digital signal is converted back to an analog signal in the HDTV component input. Only in this case does the analog component signal appear better then the digital signals of DVI and HDMI.
9. Even when you have a DVI input connected to a DVI output, or an HDMI input connected to an HDMI output and your HDMI versions are backwards compatible with each other you can still have problems. If you cable is too long like 10 meters or more you can have the picture signal fade in and out or have blurring/digital blocking. The optimal cable length is 5 meters of less. The reason why is that some DVI or HDMI chips are not of the same brand and made by different manufacturers. Their eye or window specifications are not always the same and have screwed from the basic designated rules and regulations. This creates a signal syncronization mismatch and the signals may show a variety of problems. Sometimes the DVI or HDMI cable itself may be of poor quality and has created a inferior impedence match. This will also cause bad symptoms. Some HDMI and DVI chips from certain manufacturers are built with a very robust design and will be able to capture signals even with inferior cable quality and even long cables of 25 meter or more. The best case scenario is to own the highest in quality from the HDTV, set top box, dvd player and cables to insure you have optium design built in to your system.
10. When you get a High Definition signal (HD) from a pay channel or premium channel from your HD digital cable or satelite set top box, you may soon be required to have an HDCP encrypted system inorder for you to see the signal on your HDTV or DTV. This means you must have a DVI with HDCP or HDMI with HDCP connection. Now the problem is that some earlier DVI connections do not come with an HDCP encryption scheme with it. These sets will not be able to pick up an encrypted HD signal if your broadcaster decides to activate it. However almost all HDMI connectors have HDCP encryption built into it so it is less likely that you will have a problem with an HDMI to HDMI connection.
11. Another problem issue is that the only way to know if your system has HDCP encryption or know what HDMI version your system has is to find the make and model and request the information from the manufacturer. Another way is to open up the set or box and to find the chipset to get the make and model of the HDMI chip. You can then go on to the web to search for the IC specs of the chip to find the version and HDCP encrption capability.
12. The positive side to all of this digital mayhem is that in the future most all of the newer systems will only have HDMI as a digital connector. And these will all be backwards compatible to all the older systems including DVI and all built with HDCP encryption. All new DTV and HDTV sets today have to be HDMI certified before they hit the market. And there is a compatibility program that insures the HDCP encryption scheme works 100% between all makes and manufacturers HDMI systems. If you buy a new HDTV, set top box and dvd player make sure that they have the 'HDMI' logo certification label as well as the HDCP certification label named 'Panel Link' or 'Simplay HD' on it. This will insure that not only will you be able to get a guaranteed signal but it should be the best signal quality with a most optimal cable length and also have HDCP encryption for all HD signals.
13. If you have an earlier HDTV or DTV set with problems as I mentioned in my many points above, I suggest you contact your sales channel or even the manufacturer and give these guys a piece of your mind. Let them know that as a consumer of durable goods you deserve to be treated better than this and demand a reprive or compensation in the form of discount coupons or purchase vouchers on newer systems to compensate your loss with these transitional yet incompatible HD systems your were duped into buying. I think if enough if the consumers give them a ear full, they will get on the ball next time such a technical transition occurs.