720p would seem overkill on an 800X480 res device. It would also run hotter and drain the battery quicker. My Archos 5 has the same basic chipset as the N900 and 720p on the A5 gets the device hot after about 5 minutes and it was designed to be a video player and is a bigger device. Zune HD gets hot too.

Not to mention the Archos gets hot and has discrete heat sinks to cool it and uses the metal of the case to help in the heat dissipation.

The netbooks without decent GPU's or one at all will always run 720p poorly. You would need to get a netbook with an active GPU that handles 720p. There are plenty of them out now and cost the same price. Kind of the same reason why video is poor on the 7200 mobile chipsets- no active GPU, so CPU is doing everything.