It may not be worth responding to someone uses the word fanboi, but apple do make a component video out adapter, and via both that and the VGA connector it is capable of doing 1280x720, and playing video through that.
Quite rankly the A4 + with the h.264 chip most certainly does have the juice to play 720p video. The screen is 1024x768 for whatever commercial reasons Apple have (presumably to get IPS at a given price point), but that has nothing to do with its ability to playback a given resolution video.
And down-scaling really doesn't help you out much with h.264. Certainly playing a 1080p file at 720p never made it watchable on my netbook.