Standard Video Quality is actually a critique I try to address in my other web project: THE424SHOW
A higher quality camera @480p can outperform a lower quality camera @720p. For example, the rear-camera on my S3 will never be as good as the front-camera, even at 720p. I would further argue that a 720p recording can look better than 1080p since it averages out the noise during the downscale, which makes it less distracting. Of course, it depends on the equipment you are working with, and how much detail needs to be displayed. In terms of Anime, it comes down to the Original Source; or taken to an abstract extreme: The Original Animators. I mean --all things taken into account-- an artist that knows what they are doing can produce better work at 480p than an artist that doesn't know what they are doing at 1080p.
Granted, it depends what the purpose of the piece is: If it's quality for the sake of quality, then yeah-- High Definition is needed; otherwise it all comes down to what your work is trying to say.
So, in terms of AMVs, just ask yourself: "What does my AMV say?"
Is it trying to say: "Hey! look at how sharp these lines are?!" or does it try to communicate something else?
[Partially] based on that, I think one can decide how much priority should be allocated towards Quality.