From joystiq.com:
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In a column published today on Develop, Black Rock Studio (Pure, Split/Second) technical director David Jeffrries revealed that Microsoft has removed an item from its TCRs (Technical Certification Requirements) that stated all Xbox 360 games must run at a minimum of 1280×720 (720p) resolution if the system is in HD mode. According to Jeffries, this was done earlier this year so that developers could be “free to make the trade-off between resolution and image quality as we see fit.”

Joystiq has confirmed with a trusted source familiar with Microsoft’s TCRs that Jeffries’ claim is legit. Not only that, but, as of March 2009, Xbox 360 developers are no longer required to utilize full-screen anti-aliasing in their games. The elimination of both requirements is especially noteworthy since the console maker had touted that all 360 games would run at a minimum of 720p with at least 2x FSAA since before the hardware launched.
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Full Story: joystiq.com