It's not a ridiculous pixel density really. It has around 316PPI I think, the average smartphone has around 250PPI. Compare to the "old" iPhones it is a massive increase though, they only have around 160PPI.
The HD3 is rumoured to possibly have something stupid like 350 PPI if the (poor) rumours are to be believed...
Yer even my Xperia x1 does 800 x 480 in a 3" screen delivering 310PPI easily.
It does rule to have that sort of pixel density as I dont need cleartype on hehe
sid