720 is defiantly the way to go, but if you need to do any converting, use Handbreak, it lets you change EVERYTHING. Great, free program, deinterlacing, aspect ratios, filters, etc. Very awesome.
On that note I'm still having some issues. I can't find ANY file format/config that adobe premiere likes immediately. Everything I import comes in redlined, needs to be rendered, and even then, doesnt seem to look like full 720, either it lags, or something.
I'm really not happy about having to render every clip I import before i can view it (and thats if it will even play right). If anyone can give me advise on what format to export your videos to, how you did it, how you edited it in Premiere, and any other tweaks or tricks I would be very very happy.
When I get this all sorted out (oh i will) I'll be posting a detailed blog about this, to help others in the future (plus have a reference for myself later as well).