I just bought a new Panasonic VIERA 32" 16:9 8ms 720p LCD HDTV TC-L32X1 for my in-laws when they finally had Verizon FIOS brought into their neighborhood last month.
Install was by the Verizon tech using the HDMI cable I also had shipped to them.
The HD channels quality is excellent, but the SD quality is smeared -- almost looks like an impressionist painting. 
It is not the TV -- the TV menus are crystal clear, as are the HD channels.
And, it is not just the broadcast HD -- the DVR box menus are also smeared when viewing as SD channel, as is the guide and the pop up channel info.
We've tried all the settings on the TV -- Zoom, 4:3, etc.
The other TV (an older CRT) actually has better SD quality than the Panasonic. 
My research indicates we're not the only ones on FIOS with this problem. Someone suggested using the component hookup rather than HDMI?
Other say that IMG 1.7 is supposed to solve the problem, that the SD quality was fine before IMG 1.6.
Any suggestions, solutions, or updates?
The picture is virtually unwatchable. 
Thank you!