It's not a rear projection thing either. It is simply that SD doesn't look good when it is on a large screen. It was OK when it was on a 26" or even a 36" CRT, but enlarging that SD source to a 50" or 61" or larger (and keeping the same resolution remember) it just doesn't look that good.
HD TVs as a whole don't produce a great SD signal. There are some exceptions, but most produce a picture that is just too sharp and highlights all the defects in SD. Then factor in that most HD sets are going to be larger, and the problem is multiplied.
A SD set produces such a soft picture, that a SD source looks better on it than the same source on a HD compatible TV.
That being said, once you have HD, you'll never go back. But if the majority of your TV viewing is going to be via a SD source, you might think twice about spending the money for a HD set.