Ok it transcodes them but it does it on the fly and I don't have to reencode my data manually and load it onto the N900. So yes it's not true 1080p but the source is 1080p and it's hassle-free, wouldn't you agree?

For me the goal is to be able to load up a HD video and play it on my N900 without ripping the disc and waiting hours for the file to be ready. So, 1080p on my N900 is not a misnomer, I think. Anyway, thanks for clearing it up, it's not really 1080p playing on ther N900's 480 screen.