I did a lot of experimenting with this last week as it happens! Knowing that I was going to replace the drive I had nothing to lose!
Assuming you have tivoweb of course and know how to use the resource editor (press return to submit each and every change you make; select the "update resources" link after doing them all). I measured these resolutions (*):
0 = 720x576
4 = 544x576 "best"
2 = 480x576 "high"
1 = 352x576 "basic"/"medium"
Selecting resolution "0" (I modified my "high" setting as I don't use it much) did have the problems you mentioned. Basically the picture is offset to the left quite a bit and up a little bit. But the increase in resolution was certainly noticeable.
The other main thing I noticed was that we don't have VBR. Even with "save disc space" turned on, tivo still doesn't use VBR mode. I'm suspicious that this is because both the "DBSBestVBRBitrate" and "DBSBestMAXBitrate" are set to the exact same value (for example Best quality with Sky digital lineup). When you start a recording the tvlog says "using CBR, bitRate=5960000, maxBitrate=5960000" nomatter whether you have Save Disc Space on or off. If you then set the VBRBitrate to a different (lower) value, tivo reports that it is using VBR mode in the logs.
I also changed the live buffer to Medium
There is also this thread:
http://www.tivocommunity.com/tivo-vb/showthread.php?s=&threadid=108462&highlight=bitrate
I set my "Basic" to 800000 and 850000 values (NB: this made it use VBR mode, even in Basic!). It looked fantasically awful - like old AVI files where the colour disappears and you get blotches of grey. It also made the tivo say I had 314 hours of Basic quality on my 138GB drive.
HTH