Originally Posted by C-J
In other words, I am choosing between a smaller, sharp display - contra - bigger, blurry display, pixel-wise?
Right. In theory, the "pixel-perfect" configuration is better because you won't get the blurring that occurs with scaling. However, some applications might have trouble with such a configuration. For example, another poster complained in a different thread that MythTV (IIRC) only works correctly when the desktop is actually 1920x1080, and that chopping off parts of it for overscan compensation causes some sort of really slow UI resize operation that results in worse blurring than GPU scaling does. I'd consider that a bug in the application, but a scaling configuration is an easy way to work around it.
I guess the moral of the story is that which method you use depends on what you want to do with it, but you at least have the choice now.