There's no such thing as "properly scaling" between 720 and 766/768 (I think the hardware resolution's 766 not 768 if I remember right; either way, 2 pixels don't matter - the video mode on the PC is certainly 768 though). They're far too close together to scale without beat frequency issues. Not accepting the native resolution I'd agree is a definite failing of the product, but I honestly can't criticize the scaler - it does as good a job as can reasonably be expected i.e. bloody awful. At the end of the day, to scale between these resolutions means inserting 48 extra lines into the display *somewhere*. It doesn't matter how nicely you do this, or how intelligent the algorithm, it's still going to mess up display of text or any fine-detailed horizontal pattern.
The inability to set the native resolution I suspect may be part of some misguided effort to avoid confusing anything connected to it - at least it's safe to tell games consoles etc. that it does 720p and 1080p; I assume they'd ignore an extra 768 resolution, but I wouldn't be too amazed if that messed something up on some product somewhere.