Even when I receive HDTV chanels, the display reflects only 480.

If it's picture that's giving a double image from your terrestrial aerial it's called ghosting , you need to move your antenna it's caused by signal reflection and usually happens when your in a strong signal area.

Normally that option is provided through the device you use not the TV itself. For example my xbox has options to display at 480/720/1080 and you have to decide.

If you're using an HDMI cable your display will automatically adjust the settings based upon the video source. Make sure that your source is capable of outputting 1080p. If it's an HD Cable Box or DVR, the maximum resolution it can display is 1080i. If you have one of these HD boxes, set it to only display 1080i as there will be a delay every time you change channels from a channel that is not naturally at 1080i.
If your source is a standard DVD player, it can only display images in 480i (or 480p if it is Progressive Scan) and therefore your TV will display the picture in 480 resolution. If your source is an upconverting DVD player it will display up to 1080p however, Keep in mind that DVD's are in 480 resolution and that regardless of upconversion (or upscaling, though improved, the picture will not be in HD.
The only way to achieve a true 1080p (not dpi... that's dots per inch... that's a printer term. The "p" is for Progressive Scan as opposed to an "i" for Interlaced) is from a 1080p source, i.e., a Blu-Ray disc player playing a Blu-Ray Disc with the use of an HDMI cable. Component Cables can achieve 720p/1080i only with your TV as it does not support 1080p over component cables.
As an aside, there are some media players that support 1080p output and some DirecTV Boxes and DVR's d oas well for 1080p Pay Per View movies.

if the tv is not a 1080p model it will not accept a blueray signal

This Sharp 1080p LCD HDTV with 120Hz fine motion enhanced provides a slim, versatile high-definition television solution with a distinctive design. Features a high-performance ASV LCD panel for high brightness, spectral contrast engine UD for high contrast ratio, low-reflection glare protection and wide viewing angles.....GO AHEAD

The set doesn't do that, only the broadcast stations can. Hardly anyone broadcast in 1080p. 99% broadcast in 1080i = 720p. Your set will produce it if it can get it. 1080p broadcast is probably a few years away. A Blueray DVD player with a 1080p disc will get it for you. I hope this explains it for you.

You have a bad DMD board. It is easily replaced but not easily aligned. I would suggest having a technician look at the TV. The DMD board is the board with the million little mirros on it. The white squares indicate a few mirrors sticking in the on position reflecting the light from the lamp constantly. The black are just the opposite reflecting no light at all.

I used to sell flat screens at Circuit City before they closed the doors. I caught a great deal on a 42" Pansonic Plazma 720p and love it. Even at 42" the picture is crystal clear when watching the digital channels. Start by looking at Sears & Best Buy's websites, looking at TV's that are $200-400 above your price point to see what is available. If you find a few that meet your requirements, read the reviews posted by other owners. Stick with LCD and to answer the question about the cable box, just tell the cable company and they will swap you for a digital cable box. If they try to charge you for it say something like "I would like the box for free or please cancel my service." Or mention that you saw a promotional ad on TV and you wonder if you can have that price. They fold every time. Not to mention, they will throw in other features at no charge to keep your account open. I would also recommend saying away from lower end TV's if you use your set a lot. If you want to keep the cost down (I assume you do) look into LG or Toshiba LCD's as they are lower priced than the Sonys and Panasonics and they are very good products. Another way to save some $ is to go with 720p. Right now, cable is only broadcast in 720p and doesn't look to be upgrading anytime soon. Unless you are buying a BlueRay player or a Playstatoin 3, 1080 will be overkill and more $ = smaller TV for your dollar. Good luck and happy Flat Screen watching.

You have to go into the blueray player menu and select the type of output. And, yes the display on the TV will automatically indicate the type signal it receives from the source.

michtech

HDTV capable: Yes (up to EDTV, 480p)