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I output 1080i from a PC using a component cable, which would probably put most DVI/HDMI connections to shame.
As Stephen said, all things being equal, the digital route "should" be superior but in reality this is not the case. Many digital inputs/outputs have restrictions and are not as flexible as their analogue counterparts (except the odd one or two).
Doc
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VISUAL NIRVANA The Canvas - KRP-600M (and TH-50PF10), The Artist - Crystalio II VPS3300
AVR: Pioneer SC-LX81, Onkyo 705 BLU-RAY: Denon DVD-2500BT (UK), Panasonic DMP-BD50 (US) and DMP-BD35 (UK), Sony PS3 (UK) HD-DVD: HD-XE1, HD-E1 DVD: Philips 963SA SDI SKY-HD: Thompson, Pace
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