OK guys, sorry I'm late. I worked in the HDTV hardware industry for awhile and would consider myself well educated on the subject, so I will chime in to help you out.
360 setup vs TV converting signal = When you're dealing with a multi-format platform, such as the 360, then you want to stick with the native resolution of the game since the TV is usually going to have a better converter built in. Now, if you bought a cheaper brand then you may just want to let the 360 do the video conversion since it has new components that are of good quality. I won't get too deep into this, but it's a basic thought process in home A/V.
1080i vs 720p = This one is a touchy subject because people want to believe what people have told them, but here is what a videophile will tell you. BOTH are terrific quality when done well. The main difference has to do with motion on the screen. When you are dealing with a static, or motionless, image then you will get a better picture from the 1080i than a 720p of equal quality. When you are dealing with a dynamic, or moving, image then you are better off with a 720p than a 1080i of equal quality.
HDTV antennas = It is best to use an HDTV with a high gain, something like the CM4228. Try many different locations in your attic, and directions to point it, in order to get the strongest & best signal that you can. Remember you need a built in HD receiver in order to translate the signal from an HD antenna, otherwise you need an aftermarket HD receiver to handle the signal.
If I missed anything let me know, but if you want to do some research for yourself then go read these forums:
http://www.avsforum.com/avs-vb/index.php?