a basic question on HD

"1920 X 1080i or 1080p....as I understand it...if 65" plasma has pixels of 1366X 768 is HD?"

A quick rule of thumb, as it was explained to me a long time ago. In your example '1920x1080', look at the '1920' number/position of it as the number of interlaced count the display can produce, eg 1920i or 1080i. Look at the '1080' number/position as the "progressive scanned" pixel count the display can produce, eg 1080p or 768p.

To answer your question, the 768 does fall above the 720p figure to constitute HD. So, yes the display can produce a HD 720p signal in true HD.

"Does it take advantage of Blu Ray, HD DVD properly?"

As long as the number is above 1080, then it can display the 1080p HD signals BluRay and HD-DVD can produce. As for the display you mentioned, the answer would be no, because it can only display a signal of 768p or below.

"But wanted to ask the question as the dealer kept insisting it would do full HS of 1080i....is this not the same as pixel count. Am I missing something here?"

The dealer is correct and so are you. The mentioned display (1366 x 768) can handle the 1080i HD signal. This is the pixel count, yes. However, it can not handle the 1080p signal of BluRay and HD-DVD because the second number is not 1080 or above.

I hope this makes sense and explains things alittle better.

Screens are a variety of sizes. All the plasma and LCD etc screens with a pixel count of 1080 to 1380 or so across and 750 to 1,100 up/down are 'native 720p or 1080i"
Remember 1080p is TWICE the bandwidth of 1080i.
And that 720p is about THE SAME bandwidth as 1080i.
To START using 1080p the tv MUST HAVE enough pixels.. This STARTS at (a minimum!) 1920x1080. You could have lots more pixels and still be in the 1080p ballpark, but not less.
Anyway, all this is still up in the air as very few TVs and players actually transmit the 1080p data. Between HDMI1.3 and it not even being implemented properly yet, and almost NO screen acepting a true 1080p signal from a player...
It is still a total mess out there.
I personally do not want to bother with HD until this mess is eventually cleared up (at LEAST two more years)
I have my 720 native res Plasma, and my Denon 5910 DVD player via HDMI. I get decent picture quality. Eventually the stuff being manufactured will have to connections and the stability to be worth investing in it. But in the two year time frame, we may go another step up anyway, doubling the bandwidth yet again.
Right now buying into 1080p is gonna get you only half of what you expected. (Unless you are using a Playstation 3 as your source??) and you have a screen with a 1080p inputs..HAH HA HA hah ha.....