This is where we are not syncing in this argument. You are talking about theory again. In real life, I can guarantee you that there is no visible difference to the quality of the video by downscaling. Not to our eyes anyways I assure you. Especially on a tiny mobile phone display. A perfectly encoded FWVGA resolution video looks identical to the 720p original source video being playing on the same phone.

Also, video decoding is all done by a dedicated DSP chip and is not done by the CPU or GPU. So their performance isn't compromised regardless of how big the video is.

I guess you don't watch a lot of videos on your phone. So you don't really understand how big of a benefit it is to not having to encode videos all the time. It's a huge waste of time, storage and electricity encoding videos when it isn't needed on other phones. (by storage, I mean PC storage as you have to keep 2 copies of the same video if you want to keep the higher quality source video while keeping another copy for your incapable mobile phone for later viewing if you don't want to re-encode again)

I guess I care about this much more than most here.