I've read that the xbox on 1080p will play the games via component at that resolution, but not the hd-dvd movies, they'll be in 1080i. If you want 1080p for movies, you'll need the vga cable or the elite via hdmi.
The thing is that the component input on the monitor is really really bad. I imagine the wii looking bad on other displays with higher resolution, but the low quality component input on the 20WMGX2 doesn't help either.