Resolution lowered, how nice

Turning HDMI output to 480p resolution and having HD1000U do the upconverion made the trick. Standard Definition content looks good now.
In xorg.conf:

Section "Monitor"
Identifier "Monitor0"
VendorName "Monitor Vendor"
ModelName "HD1000"
HorizSync 15.7 - 68.7
VertRefresh 50.0 - 100.0
Modeline "848x480@60" 31.47 848 880 992 1024 480 490 495 505 +hsync +vsync
EndSection

Section "Screen"
Identifier "Screen0"
Device "Videocard0"
Monitor "Monitor0"
DefaultDepth 24
SubSection "Display"
Viewport 0 0
Depth 16
Modes "848x480@60"
EndSubSection
SubSection "Display"
Viewport 0 0
Depth 24
Modes "848x480@60"
EndSubSection
EndSection