Hi there. I just bought a 46inch of this TV, and using an HD source is everything. My current sources are Analog cable (yea, yea...), DVD on component in, wii / PS2 on composite in, USB stick with avi file, and laptop on hdmi.
I tried an older DVD player with component cables, and the pixel stretch / upconvert was horrible. Discovered my DVD output was 480p... and it certainly didn't scale up well.
I then tried the Wii on the composite video (lol)... Even worse. 480i stretched out looked nasty, and the blur with games was even worse. PS2 - same thing - really dark and blurry picture. I hope to tweak this a bit (getting component adapters), as the more I read about even trying to upconvert these signals may be useless.
Then I tried HDMI from a laptop (external hdmi port on laptop direct to TV). Pretty nice. DVD looks way better through the PC than my DVD player. Of course, newer DVDs were better than some older ones.
Oh... I also did a USB flash drive with an avi rip of a movie. Shockingly, even this poorly ripped movie looked way better than my older DVD player for playback. Looking forward to sharing media to this TV...
As for the motion blur (and here's my problem), enabling the auto motion plus creates a noticeable skip / lag every 2 seconds (roughly). The only time it isn't noticeable, is when set to 'clear' - but then you begin to notice choppy rates / blur again. the LED motion plus didn't make a difference in either case. I'm suspecting some sort or processing lag / buffer or something, and I'm really hoping there's a firmware patch in the future that'll address it. I just got the TV, and hope that I can use it for more PC gaming in the future, and would want that auto motion plus feature working 100% (and with as little latency as possible).
Anyway, I'm planning to get a Blue Ray player for sure (starting to look into it), and most likely will build an HTPC for it (gaming / media access). I'm also looking at the smaller WD HD live plus as a short-term solution for streaming network files to it (in 1080p), and maybe use it for the netflix (HD streaming!).... Again, the avi playback was impressive with the built in player.
As for your WiFi idea, I guess you could try that, but just make sure whatever you're trying is an actual HD file / format of 1080p. Head to Youtube (via the SmartTV apps) and maybe see if you can select the 1080p HD formats of some videos (if available for the clips). Worked for me via the Laptop as well, and man the picture looked great!
Let us know what you find!