I believe only the SA STBs allow for a passthrough mode. (SA8300HD, SA3250HD and some of the Pace models)
To be honest, I've done a lot of setups in different homes and the subject of how to set up the box comes up in each instance. We do a test of 720P, 1080i, passthrough, etc and it's rare that a client has a distinct preference.
Often, for SA STBs, we even set up the STB to "upconvert" or eliminate 720P (or 1080i), so that the switching between HD channels of different formats is faster, without the "mad scramble" that appears on screen when switching formats.
There were even a couple of TVs recently that failed the bobbing test, where we tried 720P and 1080i - 720P should possibly have been superior and the client (and I) saw little/no difference - even with the HDNet test pattern in place to test... I think you need really good testing, with various sources, various STBs, etc to be able to get a definitive answer to this question.
I CAN tell you that when you have a good channel, like HDNet, or some of the Discovery programmes, the quality comes through, no matter what the setting, provided it's HD, on a properly set up HDTV.