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Yes it is quite confusing.
What is the maximum resolution of your flat panel television set? If it doesn't go up to 1920 x 1080 then the 1080i also is emulated which means it's fake. It is possible to run 1080p on a 22" monitor if it supports emulation even its native resolution doesn't reach that high.
Bandwidth should also be taken into consideration.....but it's always quite complicated.
A promising way is, to my best knowledge, to borrow or rent a Bluray movie and try all the combination of display settings with your console and tv, then you will find a optimized setting. My guess would be 720p probably runs best on your system.
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Linear Mode
