No, you should not have to set your display lower. My 24" samsung monitor is set to 1920 x 1200 and plays blu-ray fine.
Have you run one of the compatibility programs that might point out a problem.
both monitor and graphics card must be HDCP enabled to work off of a DVI connection. Reason others need to know specific HW, ie Monitor, GPU, and playing software.
I believe most ATI 4xxx GPUs work. and NOT all (even late model) monitors are HDCP enabled. THANK Bill and DRM group.
You can try a VGA connection, but you lose quality.