They don't make 120 Hz IPS panels or 120Hz monitors with 2560x1440. (It's a limit of the current cable standards, HDMI/DVI can't handle anything larger than 1920x1200@120Hz). If you want 120Hz, you're going to be sticking with 1920x1080 and a TN panel. It won't look as good as an IPS panel and the resolution is lower, but motion would be smoother. I hear that some people don't even notice the difference between 60Hz and 120Hz, while others can't stand going back to 60Hz, so you may want to check one in a store first.
1920x1080 with lots of AA on a 24'' screen will look similar to 2560x1440 with no AA on a 27'' screen. You're getting similar quality at a larger size with 2560x1440. 2560x1440@27'' is going to look noticeably better than 1920x1080@27''.
"Ultra seetings on AAA titles" isn't a very well defined thing. Some titles (skyrim for example) require very little GPU power to run since they're console ports. Others like Metro are far more demanding. Sim type games like FSX require tremendous amounts of CPU power but not much in terms of GPU. AAA titles from a few years ago will run on very little GPU power, too. You'd be better picking a specific game or just looking up benchmarks. Paired with a decent CPU, a 290x will run a stable 60 FPS @2560x1440 in nearly all games, at least if you turn off AA. That card in particular is a bit overpriced right now, though.