Hi James,
Well this departs from the original issue in this post, but I'd be happy to respond:
I am actually in the AV industry and routinely install home theaters, etc. so I am quite familiar with all issues involved. Here are a couple of items that I can comment on. There is a HUGE difference between the HD and standard NTSC signal broadcasted by DirecTV. While I am not familiar with your particular TV model, I would say that something is wrong if you can not see a very obvious improvement with HD vs. non HD transmissions. That said, there are things that you need to consider. The example that you used (Endless Summer) is a perfect example of inferior HD transmission. That is an old movie shot on film, transferred to DVD and upconverted for HD transmission. Garbage in, garbage out! You will surely notice a major difference when watching shows that are shot naively for HD, such as most shows on the Discovery HD or HDNET, etc.
Also DirecTV is compressing the heck out of the signal to be able to transmit the signal to you. This will greatly improve as they launch the new lines of receivers that can utilize MPEG-4 compression. These will be coming out starting January (supposedly).
So, in other words, not all HD is created equal.
Also, not that a 35" TV is exactly small, but by today's standards, it is. You can also appreciate the difference more clearly as you step up in screen size. This is for 2 reasons. First, when you have a small screen, everything looks great on it! Because the number of lines of resolution stay the same, and when they are squeezed nice and tight on a small screen, they look great. You take the same number of lines and spread them to fill a 62" TV and then you will see that regular NTSC transmission looks like crap! That's where HD will truly shine.
Secondly, as you go up in screen size, you are also usually stepping into a better quality TV. And at the other end of the spectrum is when you get into the 90", 120" etc screen size used with front projectors, etc.
As someone is this industry, I encourage you to go to a reputable AV shop (Not your local Circuit City) and let someone who knows what they are doing show you what is possible.
Hope that helps.