I have a similar but odd issue. My YouTubeTv is streaming through a Roku Ultra to my 1080p LG TV. The Roku "Display Type" is set Automatic (1080p). I know that various broadcast channels are 720p native (e g. ABC, ESPN, etc) and the interpolation, especially on titles, looks bad. But if I "Restart" the Roku and immediately go to a 720p broadcast it looks fine- no issues. However if I then go to a 1080p native broadcast like CBS or NBC and then return to a 720p show, it's messed up again! The Roku only seems to interpolate 720p after a reboot and no 1080p viewing.
I tried your workaround @Mnale and it works! Restarting, going to Youturd and viewing a 720 vid first is good quality. However, as soon as you view a 1080 video and go back to a 720, the quality is awful and remains so for all 720 vids.
