Whew, that took longer than I expected.
At this point in time, I suspect that the model you have isn't specifically made for use with a computer. The Panasonics that I tested that only have a HDMI jack are designed for TV usage, and as such, overscan all the footage fed into it.
http://scanline.ca/overscan/ So to get the Windows Desktop to show up without stuff getting cut off, you are probably adjusting for the overscan (i.e. scaling the desktop down and adding a "border"). The TV also does some scaling to get the image to fit to the LCDs native pixel resolution. As of this writing, all the current Panasonic LCD TVs have a native resolution of 1366 x 768, which means that everything that you feed into it has to be resized to fit the screen (yes, everything).
Testing: The PC I used for the testing could only allow me to choose a limited array of resolutions that came close. These are: 1152 x 648 (iirc), 1280 x 720 (HDTV 720p standard), 1280 x 768, 1360 x 768, and for kicks I also tried 1920 x 1080 (HDTV 1080i standard*). The TV ended up being the
Panasonic TC-23LX60 since it was the easiest one to move to the PC I would test on.
First off, 1280 x 720. This res gave me the least trouble, but because of the set's overscan, I lost about half of the Windows Taskbar and a similar amount from the other edges of the screen. Picture looked good, text was not great, but readable. Using ClearType helped text display.
Now, to go back a bit for 1152 x 648. Got rid of the overscan, but now the screen is underscanned. This means that a black border surrounds the Windows Desktop. Unfortunately, as far as I know, this set cannot adjust the overscan (more on this later).
1280 x 768. The set didn't like this resolution. Like you experienced, the picture shimmers like the scanning frequency is all wrong.
1360 x 768. Same results as 1280 x 768, if not worse.
1920 x 1080. This resolution got down converted to 720p. By the TV set or by the TV telling the computer to go to 720p (1280 x 720), I don't know. but when I tried it, the OSD of the TV said 720p. Picture was a bit softer than 1280 x 720, probably because of the signal being interlaced (1080i) and/or the scaling done to fit the higher res onto a lower res screen. Other than that, same results as 1280 x 720 with the same overscan issue.
Now, just for my curiousity, I tried using a 23" Sony LCD TV (model
KDL-23S2010). Essentially the same results as the Panasonic, but the Sony can do what I call "extra overscan". Using 1152 x 648 resolution, I can get rid of some or all the black border by adjusting a setting in the menu (Display Area adjustment). And when I used 1920 x 1080, it came up on the OSD as 1080i. But seeing as the native resolution of the Sony is also 1366 x 768, it obviously has to scale the picture like the Panasonic does. The Sony does have one thing going for it (which probably makes it more expensive, aside from the Sony name), it has a proper RGB PC monitor connection (VGA HD15). Using this connection eliminated all the issues with overscan (and underscan) and you get all the LCD computer monitor adjustments like phase/pitch and vertical/horizontal adjust. Unfortunately, VGA connections are analog, so technically, it is a poorer choice. But the Pros outweigh the Cons here.
So you may want to play with the Powerstrip utility to tweak the output resolution to fit the Desktop to the screen as close as possible, but considering that: 1 - your TV is scaling the picture at all times, and 2 - even 1280 x 720 is kinda low res for a 23" screen (not to mention a 26", 32" or larger screen), the image quality for text is about as good as you can get it (aside from enabling ClearType, which
may soften the overall image
http://en.wikipedia.org/wiki/ClearType ). That being said, since this set
is a TV and they are made for displaying moving images, movies, videos, and AMVs should look
great.
*
Some people may wonder, "Why isn't 1920 x 1080 on a LCD monitor 1080p (progressive) instead of 1080i (interlaced)?" Well, the answer is this: the TVs used in this test cannot accept a 1080p signal through HDMI. Even though the LCDs themselves are progressive scan devices and will happily accept a 720p signal, they will only take a 1080 signal if it is interlaced. If receiving a 1080i signal, the TV will then convert it internally to 720p for display on the screen (technically, 768p). With the introduction of HDMI v1.3, you may see more 1080p capable TVs, but I doubt these smaller sets will be so equipped due to cost reasons, at least in the near future.