On my Sharp 46" LCD, the 360 is a very good DVD player over component, it seems better then using my Denon 3910 Upscaling DVD Player, The main improvements are it's sharpness and colour rendition all seem flawless to me..
My brother has the 360 HD-DVD and a PS3, and tbh Blu-ray/HD-DVD look better, but the size of screen (52" in his case) still is the limiting factor.. HD-DVD looks the same as Blu-ray to us, but through the Projector, the HD-DVD and Blu-ray films look pretty stunning..
Horses for courses, but as mentioned, it does sound like your dell monitor is crap at up scaling component sources..