the 360 is limited to 1280 * 1024 at its max pc monitor rez. lcds definately look best at native rez, however newer lcds are better at scaling, so it may be worth a shot. i would search google + 360 site forums (gamespot, ign, team xbox, etc.) and see if someone else has tried the same thing and has posted there results.
BTW oblivion runs very nice on 360. It perfers ATi hardware and multi core procs anyway.