Ripping off the veil: The mysterious PS3 hardware scaler exposed
The key words in that last paragraph would be until now, because with the latest PlayStation 3 software development kit (SDK) update, Sony Computer Entertainment Inc. (SCEI) has finally exposed part of the built-in hardware scaler to developers.
The short of it is that:
As of a late January update to the SDK, horizontal scaling is now an option for developers using this scaler, but not vertical (for what reason, who knows?).
Previously, if a developer wanted to support 1080i or 1080p scaling in a 720p game, they had to render to incur the costs of an additional 1080p buffer in memory, which may have been prohibitively expensive.
But now, Sony has unlocked horizontal hardware scaling along with new resolution modes - including 960*1080. This resolution has just a little more pixels than 720p, and thus only requires about the same memory footprint, and can be scaled to 1080i/p using the horizontal hardware scaling (note that the full vertical resolution is there).
Thus going forward, developers should be able to include support for 720p/1080i/1080p modes, but it remains their choice. Though the article speculates that Sony will likely mandate it soon. Previously released games could be patched if the developer so desires.
If you don't get all that, the article itself explains the issues in greater detail.
It's puzzling why they haven't also enabled vertical scaling yet, but then I guess it's puzzling why this wasn't supported in the first place..they basically had what might actually be a very expensive chip going idle (there's speculation the chip is Toshiba's Super Companion AV Chip for Cell, or a version of it).
http://www.beyond3d.com/articles/ps3scaler/