Everything that Bell encodes and sends on to the boxes is 720p, adding 1080i to the mix adds unnecessary processing.
The 1080p on demand content is still limited, if you really need / want to watch it, flip it for that content. (Iirc, the 1080p stuff are rentals only, not normal on demand.)
It's possible that any 1080p VOD will override the 720P or 1080i setting in the STB. If I recall, BTV (satellite) did that, but I can't be sure. If anyone downloads any 1080P VOD it would be easy to check - check the input signal via the "info" or similar button on the TV.
Formats FAQ with links to Native FAQ and Upconversion FAQ:
Yes it was. The STB can output 1080P, but the incoming TV signal is 720P, as discussed earlier in this thread. (excepting some OD, which can be 1080P) If you don't watch any OD, then I suggest 720P. If you watch OD, then you can use 720P and change it to 1080P for OD, or just leave it at 1080P.